MFDA bans former rep for recommending unsuitable strategy

The director of the Ontario Securities Commission (OSC) has ordered Toronto-based Acker Finley Asset Management Inc. (AFAM) to hire a consultant to help enhance its compliance systems, after a review found numerous deficiencies at the firm.

According to a decision published on Thursday, an OSC review in September 2016 identified nine significant deficiencies with the firm’s compliance systems, and 12 additional deficiencies for a total of 21 deficiencies.

Among the issues identified as significant were: failure to meet best execution obligations; inadequate policies for dealing with conflicts of interest and inadequate documentation of Know Your Client information.

As a result, OSC staff recommended that terms and conditions be placed on the firm’s registration.

The firm exercised its opportunity to be heard by the OSC before conditions were imposed.

“AFAM advised that it considers compliance to be an integral element of its business and is eager to address any issues identified by [OSC] staff during the compliance review,” the OSC decision states.

AFAM argued that it was not necessary to require it to hire a consultant to help address those issues.

“AFAM claims that it has an experienced compliance team in place and believes that it can make all required changes to its compliance system to satisfy staff’s concerns with the help of its external legal counsel …” the decision states.

AFAM also strongly disagreed with OSC staff’s view that it has not complied with its best execution obligations, according to the decision.

However, the OSC director concluded it was necessary to impose conditions on the firm’s registration.

“While I am sympathetic to AFAM’s claims that its operations are reasonably small and it will incur costs to remediate the deficiencies identified in the report, I believe that it is appropriate for a consultant to be hired to assist AFAM in remediating all of the deficiencies identified in the report, in developing a compliance system to respond to conflicts of interest, and in developing a system to monitor best execution and the use of soft dollars,” the OSC decision states.

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