The Mutual Fund Dealers Association of Canada (MFDA) announced that it has reached a settlement with Markham, Ont.-based mutual fund dealer TeamMax Investment Corp. that will see the firm pay a $60,000 fine and $10,000 in costs after it admitted to a variety of rule violations due to supervisory failures.
Specifically, the supervisory failures included having inadequate policies and procedures to supervise leveraging recommendations; failing to conduct a historical review of leveraged accounts; and failing to implement an adequate supervisory structure.
According to the settlement agreement, a compliance review in 2013 found several deficiencies, including a “failure to effectively discharge its supervisory obligations,” such as only having one tier of trade supervision for the 40 financia advisors that report directly to its head office; not having sub-branch reviews carried out by an independent individual; an, inadequately reviewing leveraging recommendations.
In 2014, an MFDA hearing panel imposed certain terms on the firm’s registration, requiring it to resolve the deficiencies, among other conditions. Yet, a subsequent compliance review in 2015 found several deficiencies, including “some of the same ongoing issues and concerns” flagged in the 2013 review.
Now, an MFDA hearing panel has approved a settlement that indicates that the firm “has represented that it has corrected the deficiencies identified during the 2015 examination.”
The MFDA hearing panel also notes that the dealer has no prior record of regulatory discipline; that it has cooperated with the regulator; that it has spent approximately $425,000 implementing compliance improvements; and that there is no evidence of client harm due to the compliance weaknesses the MFDA uncovered.
Along with the monetary sanctions, TeamMax agrees that, given the size of its business, its ultimate designated person (UDP) will not also serve as chief compliance officer (CCO) or perform the day-to-day compliance duties of the CCO, without the MFDA’s prior written consent.
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