The Mutual Fund Dealers Association of Canada (MFDA) will hold a hearing on May 25 to determine penalties for 12 former reps at a Mississauga, Ont. branch of WFG Securities Inc. who were found to have falsified “know your client” (KYC) information in order to qualify them for investment loans.
At a disciplinary hearing held on May 16 and May 17 in Toronto, an MFDA hearing panel found that multiple allegations set out in a Feb. 28 notice of hearing were proven, and that the reps violated MFDA rules.
The respondents violated MFDA rules as part of a “widespread practice at the branch, which involved falsifying, fabricating or altering clients’ KYC information … in order to obtain investment loans to purchase mutual funds in client accounts,” the MFDA stated in the notice of hearing.
The reps, who are no longer in the financial advisory industry, “engaged in these practices, without the knowledge or authorization of clients, in order to make it appear as though the clients satisfied WFG’s requirements regarding the use of leveraging and to increase the likelihood that the lenders would approve the investment loans,” the MFDA stated.
The self-regulatory organization alleged that, between 2008 and 2014, the respondents falsified KYC information in order to obtain a total of 51 investment loans. As a result, the former reps violated suitability requirements. The MFDA also alleged that the respondents misled the regulator during its investigation.
Several of the reps also were accused of failing to attend an interview with MFDA staff, and branch manager Attal Golzay was accused to supervisory failures.