The Mutual Fund Dealers Association of Canada (MFDA) has released its 2021 annual enforcement report, including information about how the MFDA’s enforcement department operates and a list of disciplinary cases completed in 2021.
All told, the regulators commenced 91 disciplinary proceedings in 2021, up from 79 in 2020 and 78 in 2019. It concluded 95 disciplinary hearings, up from 77 in 2020. Concluded hearings resulted in 19 permanent prohibitions, 35 suspensions and total fines of $4,326,670 imposed against members and approved persons. Of this, the MFDA says 45 per cent has been collected, an increase over 2019 and 2020 numbers when collection rates were 19 per cent and 29 per cent, respectively.
“The MFDA has fine collection powers in all the provinces in which the MFDA is recognized,” they write. “However, successful collection of outstanding fines using these powers depends on several factors including but not limited to the availability of assets to collect against and the respondent’s status with respect to any bankruptcy or similar proceedings.”
Annual Enforcement Report 2021 also describes the MFDA’s enforcement process and states that it will be prioritizing cases involving seniors and vulnerable investors in the coming year. They add that MFDA staff have observed cases in which approved persons are named as beneficiaries or executors in wills prepared by their clients and cases where approved persons have been named power of attorney and have acted in a manner causing financial harm to the client. “Staff will continue to prioritize these types of cases going forward,” they add.
Overall, in 2021, 414 cases were opened, down from 461 in 2020 and 453 in 2019. In 2021 the top three primary allegations made in cases opened during the year included complaints about business standards, suitability and unauthorized or discretionary trading. In proceedings actually commenced in 2021, the top allegations were related to pre-signed forms, policies and procedures and falsification or misrepresentation. “The MFDA commenced 91 proceedings in 2021 by notice of hearing or notice of settlement hearing. Many of the proceedings involved more than one alleged violation,” they write.
