From the Regulators

Fund dealer improves internal compliance systems

By IE Staff |

The Nova Scotia Securities Commission (NSSC) has approved a settlement agreement with Markham, Ont.-based mutual fund dealer Keybase Financial Group Inc., the commission said Friday.

The NSSC says Keybase violated N.S. securities laws by failing to ensure the accurate recording of client information by employees during new account applications. The firm also failed to make sufficient enquiries of client credit worthiness, instead relying on the third-party investment lender to make the determination. Keybase also failed to ensure that all of its employees were properly registered with the commission.

The NSSC says Keybase has accepted responsibility for its conduct and were co-operative with commission staff. Keybase also reviewed and improved its internal compliance systems. 

The commission approved the settlement agreement and ordered Keybase to:

  • be reprimanded
  • comply with Nova Scotia securities laws
  • comply with the Mutual Fund Dealers Association suitability guidelines
  • make a payment of $148,798
  • pay an administrative penalty of $100,000
  • pay costs in connection with the commission investigation and proceedings of $10,000.

Branch manager fined

Separately, the NSSC approved a settlement with former Keybase branch manager, Gregory Matthew Duncan.

The NSSC says Duncan violated provincial securities laws by failing to properly and adequately supervise the trading activities of employee John Alexander Allen. Duncan failed to conduct sufficient inquiries into Allen's new account applications submissions to ensure the information recorded was correct and consistent.

Duncan accepted responsibility for his conduct and was co-operative with commission staff.

The commission approved the settlement agreement and ordered that Duncan:

  • be prohibited from becoming registered as an ultimate designated person, as a chief compliance officer, or in any supervisory capacity for a period of five years
  • pay a $10,000 administrative penalty; and
  • pay $1,000 in costs in connection with the investigation.