MFDA issues reasons for fining rep $20,000

Campbellton, New Brunswick-area dealing representative, Gilles Perron of Investia Services Financiers Inc. has paid a fine of $20,000, plus $2,500 in costs after a hearing panel of the Mutual Fund Dealers Association of Canada (MFDA) accepted a settlement agreement with Perron, wherein he admits to using pre-signed account forms and to altering account forms without obtaining client initials on those alterations.

The MFDA published its reasons for decision May 25, stating that the MFDA has warned against the use of pre-signed account forms since at least December 2004. The MFDA also advised members that it would be seeking enhanced penalties for any such conduct which occurred after October 2015. 

“Hearing panels have consistently held that obtaining or using pre-signed forms is a contravention of the standard of conduct under MFDA Rule 2.1.1,” they write. They add that the prohibition on the use of pre-signed account forms applies regardless of whether or not the client was aware the forms were being used. 

“The use of pre-signed account forms adversely affects the integrity and reliability of account documents, leads to the destruction of the audit trail, has a negative impact on member complaint handling and has the potential for misuse in the form of unauthorized trading, fraud and misappropriation.” 

In Perron’s case, the dealing representative admits that between May 2012 and June 2019 he obtained, possessed and in some instances used 77 pre-signed account forms to process transactions for 27 clients. Between December 2013 and June 2019, he also altered 24 account forms for 17 different clients without having the clients initial the alterations. The forms were discovered as part of a branch audit carried out in November 2018. Following the audit, Perron was placed under strict supervision and received a letter of reprimand from Investia. During the investigation the firm also sent a letter including a three-year summary of transactions to all of Perron’s clients. No clients reported any issues and the MFDA says there is no evidence of any client loss.