Rep earns $20,000 fine for KYC violations and unauthorized tradingBy The IJ Staff | February 03 2020 11:10AM
The Mutual Fund Dealers Association of Canada (MFDA) announced it has accepted a settlement agreement between MFDA staff and former Scotia Securities Inc. representative, Nadine Wighton.
In the settlement, the Hamilton, Ontario representative admits to failing in her obligations to conduct adequate Know-Your-Client (KYC) due diligence on one client account. She also arranged for that client’s statements to be delivered to a third party without taking adequate steps to determine if her client was aware of that change, and accepted and acted upon trading instructions from a third party who did not possess trading or signing authority over the client’s investment accounts.
A representative with Scotia Securities since August 1998, Wighton first began servicing the mutual fund accounts of “client PS” and her extended family in December 2004. For three years, beginning in January 2010, Wighton prepared KYC update forms using KYC information from forms on file from previous years. The MFDA’s settlement agreement says Wighton would periodically drop off the client’s update forms and other account documents at the family’s business for signature, before returning later to collect the account documents. The representative did not take steps to ensure that the KYC update forms had in fact been signed by the client. (The forms indicated that client PS had expert or high investment knowledge and investment experience, even though she in fact had low investment knowledge and limited investing experience.)
Wighton also arranged to have the client’s account statements sent to the family business and not to PS herself. Client PS was not employed in the family business.
At one point she also received trading instructions from “MJ” an employee in the family business; Wighton relied on those instructions and executed two purchases in the client’s accounts, totaling approximately $12,462, without PS’s knowledge or consent.
As part of the settlement agreement, Wighton will pay a fine in the amount of $20,000 and costs in the amount of $5,000.