The Mutual Fund Dealers Association has issued a bulletin to advise its members that its staff have commenced the second round of compliance examinations.

These examinations will include review of deficiencies identified during the initial examination and resolution of these deficiencies, it says. Firms must ensure that deficiencies identified during their first compliance examination are resolved.

The notice supplies a list of common deficiencies identified during compliance examinations. And, it also lists the types of deficiencies that have been identified by MFDA staff during the first round of examinations and other routine compliance work that resulted in a referral to the enforcement department.

The list of enforcement referrals includes: churning or excessive trading in client accounts; failure to implement a two-tier supervisory structure; discretionary trading in client accounts or the existence of pre-signed trade order forms in client files; conflicts of interest in the sale of exempt securities; unresolved suitability issues; reps engaging in outside business activities or personal financial dealings that raised significant conflict of interest concerns or caused client harm; and, trading in client accounts in jurisdictions where the rep or the dealer is not registered.

In addition to these, any deficiencies that were reported in the dealer’s initial compliance examination report that have not been rectified will be considered for referral to enforcement, it says.