A Mutual Fund Dealers Association of Canada (MFDA) hearing panel issued its reasons for decision August 19, in a case regarding Waterloo, Ontario-based Sun Life Investment Services Inc. advisor, Nenad Mandic.
In his settlement agreement, Mandic admitted he altered one Registered Education Savings Plan (RESP) payment account form and used it to process a transaction, without having the client initial the alterations. A review of his files also revealed that Mandic obtained, and in some instances used 30 pre-signed account forms for 16 different clients, including pre-authorized checking and automatic withdrawal forms, RESP forms, limited trade authorization forms, order tickets, Registered Retirement Savings Plan (RRSP) withdrawal requests, know-your-client forms, Tax Free Savings Account (TFSA) forms and an educational savings plan application form.
Registered with Sun Life since October 1993, Mandic was placed under close supervision and enhanced supervision for 17 months, and paid Sun Life $14,000 for the period during which he remained under supervision. In addition, Mandic will also pay an MFDA fine of $8,000 plus costs totaling $2,500.
Citing an earlier case, the MFDA says “pre-signed forms present a legitimate risk that they may be used by an approved person to engage in discretionary trading.” In the worst cases, it adds that pre-signed forms create a mechanism for approved persons to engage in acts of fraud, they subvert a firm’s ability to properly supervise trading, and they destroy audit trails. “The presence of the client’s signature on a trade form can no longer be taken as confirmation that the client authorized a particular trade. It also compromises the ability of the member to subsequently investigate and respond to a client complaint.”
