TORONTO, June 3 /CNW/ - The Mutual Fund Dealers Association of Canada
("MFDA") today announced that it has commenced disciplinary proceedings
against Farm Mutual Financial Services Inc.
MFDA staff alleges in its Notice of Hearing that Farm Mutual Financial
Services Inc. (the "Respondent") engaged in the following conduct contrary to
the By-laws, Rules or Policies of the MFDA:
Allegation No.1: Between June 2003 and April 2007, the Respondent
approved and allowed the sale of debentures (the "Debentures") issued by
FactorCorp Financial Inc. ("FactorCorp") to approximately 680 of the
Respondent's clients without having conducted reasonable due diligence on
the product and without having made reasonable inquiries to determine
whether the product was suitable for sale to its clients, contrary to
MFDA Rule 2.2.1(a), (b), (c) and (d) and MFDA Rule 2.1.1(c).
Allegation No.2: Between June 2003 and April 2007, the Respondent
approved and allowed the sale of the Debentures to approximately 680 of
its clients without ensuring that:
a) the investments were suitable for the clients and in keeping with the
clients' investment objectives, contrary to MFDA Rule 2.2.1(a), (b),
(c) and (d) and MFDA Rule 2.1.1(c); and
b) the clients qualified as accredited investors in accordance with
Ontario Securities Commission Rule 45-501 and subsequently National
Instrument 45-106, contrary to MFDA Rule 2.1.1(c), thereby engaging
the jurisdiction of the Hearing Panel to impose a penalty on the
Respondent pursuant to s. 24.1.2(n) of MFDA By-Law No. 1.
Allegation No.3: Between June 2003 and September 2006, the Respondent
failed to ensure that all sales of the Debentures to its clients were
properly conducted through the facilities of the Respondent, contrary to
MFDA Rule 1.1.1(a).
Allegation No.4: Between June 2003 and April 2007, the Respondent failed
to establish, implement and maintain policies and procedures to
adequately and effectively supervise the sale of the Debentures to its
clients, contrary to MFDA Rules 2.5.1 and 2.1.1(c) and MFDA Policy No. 2.
Allegation No.5: Commencing December 2003, the Respondent failed to
establish, implement and maintain an adequate two-tier structure to
supervise client account activity, and in particular failed to perform
daily head office suitability reviews of trades conducted by its Approved
Persons and/or failed to maintain evidence of such reviews, contrary to
MFDA Rule 2.5.1 and Policy 2.
Allegation No.6: Between May 2002 and May 2007, the Respondent failed to
maintain adequate compliance staff to monitor adherence by the Member,
and any person conducting business on account of the Member, to MFDA
Rules, By-laws and Policies and applicable securities legislation
requirements, contrary to MFDA Rule 2.5.1 and MFDA Rule 2.5.2(b).
The first appearance in this matter will take place by teleconference
before a Hearing Panel of the MFDA Central Regional Council in the Hearing
Room located at the offices of the MFDA, 121 King Street West, Suite 1000,
Toronto, Ontario on Friday, June 27, 2008 at 10:00 a.m. (Eastern) or as soon
thereafter as can be held.
The purpose of the first appearance is to schedule the date for the
commencement of the hearing on its merits and to address any other procedural
The first appearance is open to the public, except as may be required for
the protection of confidential matters. Members of the public attending the
first appearance will be able to listen to the proceeding by teleconference.
A copy of the Notice of Hearing is available on the MFDA website at
The Mutual Fund Dealers Association of Canada is the self-regulatory
organization for Canadian mutual fund dealers. The MFDA regulates the
operations, standards of practice and business conduct of its 157 Members and
their approximately 75,000 Approved Persons with a mandate to protect
investors and the public interest.
For further information:
For further information: Shaun Devlin, Vice-President, Enforcement,
(416) 943-4672 or firstname.lastname@example.org