While several issues were seen, MFDA processes were found “effective, efficient, and applied consistently and fairly” overall
Several issues were uncovered during a CSA review of the Mutual Fund Dealers Association of Canada (MFDA), according to the agency’s report. The report covers the period from July 1, 2012 to July 31, 2015.
Conducted by seven of the provincial regulators that recognize the MFDA – The Prince Edward Island Office of the Superintendent of Securities did not participate – the review used tools such as interviews, reviews of internal MFDA documentation, and risk score calculation for each functional area of the MFDA. A risk-based approach was used to determine the effectivity, efficiency, and consistent and fair application of certain regulatory processes.
The report identified two high-priority findings in the enforcement department. The first involved a case of massive signature falsification that was closed with a warning: it occurred before enforcement guidelines for signature falsification were created, but reviewing staff said it should have been escalated to the investigation group. The second finding involved cases against approved persons, wherein the corresponding dealer member was not also named as a respondent for no clear reason.
There was also a high-priority finding in the financial compliance department involving a gap in a member examination file. The case documentation showed that the member promised at one point to provide supporting documentation required from it by the MFDA, but there was no record showing that the member provided it, or that the MFDA subsequently followed up with the member.
Five other medium-priority findings were also identified: two in enforcement, two in financial compliance, and one in policy.
“Based on the risk assessment, the work performed, and the results of the review, other than the findings noted, Staff found that MFDA processes were effective, efficient, and applied consistently and fairly,” said the report.
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Conducted by seven of the provincial regulators that recognize the MFDA – The Prince Edward Island Office of the Superintendent of Securities did not participate – the review used tools such as interviews, reviews of internal MFDA documentation, and risk score calculation for each functional area of the MFDA. A risk-based approach was used to determine the effectivity, efficiency, and consistent and fair application of certain regulatory processes.
The report identified two high-priority findings in the enforcement department. The first involved a case of massive signature falsification that was closed with a warning: it occurred before enforcement guidelines for signature falsification were created, but reviewing staff said it should have been escalated to the investigation group. The second finding involved cases against approved persons, wherein the corresponding dealer member was not also named as a respondent for no clear reason.
There was also a high-priority finding in the financial compliance department involving a gap in a member examination file. The case documentation showed that the member promised at one point to provide supporting documentation required from it by the MFDA, but there was no record showing that the member provided it, or that the MFDA subsequently followed up with the member.
Five other medium-priority findings were also identified: two in enforcement, two in financial compliance, and one in policy.
“Based on the risk assessment, the work performed, and the results of the review, other than the findings noted, Staff found that MFDA processes were effective, efficient, and applied consistently and fairly,” said the report.
Related stories:
Amendments proposed to tighten title regulation
Dealer representative banned from advising leveraged strategies
