The former president and chief compliance officer of ASL Direct Inc. has been fined $50,000 by the Mutual Fund Dealers Association for a slew of regulatory violations in the way he operated the firm.

Following a hearing in April, an MFDA hearing panel has approved a settlement agreement with Adrian Leemhuis, who was registered as an officer, director and designated compliance officer of ASL Direct since 1999. Leemhuis has also been the owner of the firm since it became a mutual fund dealer in 2003.

The MFDA found that in his capacity as president and chief compliance officer, Leemhuis “did not operate ASL in a compliant manner in accordance with its regulatory obligations.”

In particular, the MFDA panel found that Leemhuis and ASL did not maintain adequate records of trade supervision; permitted new clients to trade without first obtaining appropriately completed and approved New Account Application Forms; permitted an unregistered individual to conduct securities related business for clients of ASL; failed to implement a system to properly distribute interest earned in the firm’s mutual fund trust account; engaged in referral arrangements that didn’t comply with MFDA rules, and failed to process trade orders on a timely basis.

In addition, the panel found that the firm failed to consistently maintain minimum capital and risk adjusted capital, failed to file monthly and annual financial questionnaires and reports on a timely basis, and didn’t respond to requests for information from the MFDA compliance department concerning its financial circumstances, among other violations.

The MFDA commenced a disciplinary proceeding in the matter in 2008, after the registration of both Leemhuis and ASL had been suspended by provincial securities regulators in Ontario, Alberta and British Columbia.

Under the settlement agreement, Leemhuis must pay a fine in the amount of $50,000 and costs of $25,000. He is also prohibited from being registered or acting in the capacity of ultimate designated person, chief compliance officer, compliance officer or branch manager for any MFDA member firm for a period of five years.

IE