All securities-related business must go through dealer, states bulletin
On the heels of a WP report suggesting that regulatory lines can blur when mortgage brokering doubles up with financial planning, the Mutual Fund Dealers Association issued a warning this week.
In a bulletin released on Tuesday, the MFDA told its members that holding a mortgage-broker license does not entitle them to sell syndicated mortgages outside of the MFDA dealer.
Under MFDA rules, all securities-related business, including exempt securities and syndicated mortgages, must be conducted for the account of the dealer, and through the dealer.
The MFDA says it became aware that some members may have been advised or under the impression that they can rely on their mortgage-broker license, registration and prospectus exemption in securities legislation to trade in syndicated mortgages outside of their dealer.
Additionally, when dealing with referrals, particularly in the mortgage and real estate services, the MFDA advises members to be sure of all details related to the products and services to be provided.
“Members should be particularly aware of the risk that referrals may result in the sale of a specific security,” notes the bulletin.
