The Mutual Fund Dealers Association of Canada (MFDA) has accepted a settlement agreement with Wealthsimple Advisor Services Inc., wherein the firm admits to accessing another firm’s client records using a would-be representative’s login credentials. It also admits it did not have processes to verify that clients had provided consent for their information to be reviewed when it was inputted into Wealthsimple’s systems by representatives interested in transferring their registration to the firm.

All told, between February and August 2019, as part of an onboarding process, 20 approved persons registered with other firms provided Wealthsimple Technologies Inc. (WSTI), an affiliated technology services company owned by the same holding company, with complete information regarding approximately 2,990 clients, prior to becoming registered with Wealthsimple. The information transferred to the system included investment holdings and values and personal identifying information including social insurance numbers, account numbers and account types.

“By designing and implementing an onboarding process whereby neither the respondent nor WSTI independently ensured that potential clients had consented to provide WSTI with their client information, the respondent compromised the confidentiality of the client’s information,” the settlement agreement states. 

They add that the inadequate system of controls and supervision which allowed the firm’s representatives to access another firm’s records using login credentials not their own, also prevented the other member firm from maintaining client information in confidence.

Wealthsimple Advisor resigned its registration with the MFDA at the conclusion of the regulator’s proceedings after providing notice of its intention to resign back in May 2020. In the subsequent months following that announcement, it wound up operations, notified approved persons and clients that it had ceased operations, facilitated the transfer of client investments to other entities and closed all client accounts.

Under the terms of the settlement agreement with the MFDA, the firm will pay a fine in the amount of $100,000 and costs in the amount of $20,000.