(July 26 – 11:15 ET) – The Ontario District Council of the Investment Dealers Association of Canada has imposed a discipline penalty on M.R.S. Securities Services Inc.

M.R.S. admitted that, from October 1997 to February 1999, it failed to maintain adequate internal controls. It was fined $35,000 and is required to pay $4,150 towards the IDA’s investigation costs.

IDA staff determined that M.R.S. had been depositing its business receipts into a bank account of a related company before transferring the funds to the its own account, usually within a day. The related company was a registered loan and trust company, but not an “acceptable institution”, as defined by the Joint Regulatory Financial Questionnaire and Report.

This practice had an adverse effect on M.R.S.’s “risk-adjusted capital”. M.R.S. also deposited client cash with the same related company. As there was no written custodial agreement in existence between M.R.S. and the related company, this practice also had an adverse effect on its risk-adjusted capital.

The council determined that both practices indicates that a flaw existed in internal controls of M.R.S. The company has taken corrective action: it now deposits its receipts directly to its own account. As well, a written custodial agreement is now in place between M.R.S. and the related company.

For a complete Summary of Facts, please see IDA Disciplinary Bulletin No. 2752 at www.ida.ca.
-IE Staff