The Mutual Fund Dealers Association of Canada (MFDA) issued its reasons for decision in the case of Newmarket, Ontario dealing representative, William McTavish.
Although McTavish attempted to argue in his settlement hearing that the penalties being imposed were too harsh, the MFDA says the agreed penalties are within the recommendations of its sanctioning guidelines and also within a reasonable range relative to other MFDA decisions which have been made in the past.
The panel also pointed out that under the MFDA’s rules, it can only accept the settlement agreement or reject it. “The panel cannot change the settlement agreement,” they write, adding that the matter should have come before the panel as a contested matter, not a settlement.
Under the settlement agreement, McTavish agreed that between September 2017 and March 2021 he obtained, possessed and used eight pre-signed forms to process transactions. The forms were kept on file for eight different clients. The forms included a non-financial instruction form, new client application forms, systematic withdrawal instructions and an order instruction form.
The Investia Financial Services Inc. dealing representative also admits that he altered and used 21 account forms for 16 different clients between August 2017 and November 2020, without having clients initial the alterations. Altered information included investment instructions, risk tolerance, annual income, addresses, account numbers and institution information.
The MFDA says there is no evidence McTavish received any financial benefit beyond the commissions he would ordinarily be entitled to receive had the transactions been carried out in the proper manner. Following a review where it contacted clients, the firm also determined that there were also no client complaints or lack of client authorization.
McTavish at his settlement hearing told the MFDA’s staff that he felt the agreed penalties were unreasonable, amounting to about $1,000 for each incident that constituted a violation. He added that people today do the same thing paperlessly over the internet and pointed out that none of his clients were harmed or deceived.
The MFDA instead found that the penalties were fair and reasonable and were imposed to serve as a specific and general deterrent. “In deciding whether the agreed penalties will provide an appropriate deterrence in the case before us, we looked at the impact on others in the industry (and not just on the respondent) who might otherwise be inclined to similar misconduct,” they write.
