Agency, former nominee fined for failing to disclose MFDA sanctions

The Insurance Council of British Columbia has issued an order, fining Sentinel Financial Management Corp., and former nominee, Merlin Henry Chouinard, for failing to disclose the firm’s history of regulatory sanctions to council, and for failing to inform the council about a change in the firm’s ownership.

The council’s intended decision suggests that Chouinard and the agency breached council rules by failing to notify the council when Sentinel was disciplined by the Mutual Fund Dealers Association of Canada (MFDA) in 2011 and 2018 for failing to adequately supervise trading activity, and several other related infractions. All told, the MFDA issued $110,000 in fines, plus costs totaling $12,500. Council rules state that licensees must notify council within five business days if the licensee or any business they own or participated in as a director, officer or partner, is disciplined by any financial sector regulator.

During its investigation related to the MFDA sanctions, it was then determined that Chouinard and the firm failed to report a change in ownership at the agency in 2016, a violation of council’s rule which states that licensees must notify council within 30 days if the ownership of an insurance agency or adjusting firm changes hands.

“Two instances of the agency and the former nominee having failed to notify council of discipline from the MFDA to be of primary concern,” say the decision’s authors. “Failure to report the 2016 change in ownership was considered to be a comparatively minor issue, which, in normal circumstances, would have been addressed at the staff level by sending a reminder letter.”

Council says it was concerned, however, that the former nominee had an inadequate understanding of the council rules after he admitted that he did not know the rules for every jurisdiction in which he was licensed.

For failing to disclose in both cases, the council has fined the agency $1,500 and Chouinard $1,000. Chouinard, who maintains licenses in several other provinces but is not currently licensed in British Columbia, must also required to complete the Council Rules Course prior to submitting any future licensing applications to the provincial council.