MFDA Fines Two Advisors For Using Pre-Signed Forms

By Andrew Rickard | August 18 2015 08:56AM

Two advisors who used pre-signed forms to save their clients trips to the office have been fined by the Mutual Fund Dealers Association (MFDA).

In findings released on Aug. 14, the MFDA says that Frank K. Shaw obtained (and in some cases used) 24 pre-signed forms for 10 clients and that Richard J. Dhur, acting in the capacity of branch manager, reviewed and approved them between July 2008 and May 2013.

As part of its own investigation into the matter, their fund dealer World Financial Group sent letters to all of the clients involved and reported that none of them had complaints about the conduct of either advisor. Both Shaw and Dhur told the MFDA that they kept these pre-signed forms on file in order to complete transactions for clients as quickly as possible.

"At the clients’ verbal requests that we maintain a supply of authorized trade tickets to assist in their redemptions, I agreed to the various requests. In these cases it was often distance that was the prime factor," explained Dhur in his statement. "None of these situations resulted in a misuse or misappropriation of the clients' funds. No malice was intended. All trades were executed with the clients' specific direction."

Although there is no evidence that either of the two advisors received any financial benefit from processing these forms, they still contravened MFDA Rule 2.1.1. and the regulator found that using and processing the pre-signed forms was "conduct unbecoming".

The MFDA has ordered Shaw to pay a fine of $5,000 and costs in the amount of $2,500 while Dhur has been given a fine of $2,500 and must pay costs of $2,500. Before being able to re-register as branch managers with the Ontario Securities Commission, both must also successfully complete the branch manager's course offered by the Canadian Securities Institute.