The Mutual Fund Dealers Association is seeking to expand its ability to order summary relief against dealers and their reps.

It is proposing amendments to its rules which, “were developed to enhance the current procedures that provide MFDA staff with the ability to bring summary applications before a hearing panel for interim and permanent relief against both members and approved persons and to increase the range of situations in which such applications may be brought and the types of penalties that the hearing panel may impose,” it reports in the current OSC Bulletin. “The proposed amendments will also clarify procedures with respect to these applications.”

The MFDA notice reports that a strategic assessment of the MFDA’s current enforcement powers identified a need for the MFDA, “to respond sufficiently to situations where members and approved persons have acted inappropriately, and therefore the need to amend By-law No. 1 to provide for a broader summary enforcement procedure that can be employed beyond those situations currently provided.”

Currently, it can only bring a summary procedure in cases where: the registration of the dealer has been suspended or cancelled; the dealer has been declared bankrupt or has filed for protection from creditors; or, its membership in a stock exchange or other self-regulatory organization has been suspended. It may also temporarily suspend a member for 15 days pending a full hearing where it appears that the member has breached a by-law, rule or policy and the breach is likely to result in financial loss to the public. It may also suspend a member or person without further notice where they have failed to pay a fine or comply with a condition ordered by a hearing panel.

As these are the only situations where it can obtain summary relief, “MFDA staff may be unable to respond appropriately to protect investors and the public in exceptional circumstances”, it says.

“The proposed amendments were developed to improve the MFDA’s capacity to better regulate both members and approved persons and to protect the public interest in situations where members and approved persons have acted inappropriately,” it adds.