VANCOUVER, Jan. 12 /CNW/ - A British Columbia Securities Commission panel has found that the Mutual
Fund Dealers Association of Canada (MFDA) acted improperly in
soliciting proxies from its members.
The BCSC panel's decision is the result of a review into the MFDA's
conduct in connection with governance decisions the self-regulatory
organization (SRO) made following an annual general meeting and the
solicitation process it conducted for a special general meeting of its
membership in October 2009.
The panel said the MFDA directors failed to consider how the
solicitation of proxies by an SRO from its members differed from a
solicitation by a company from its shareholders.
"We find that the MFDA board's decision to conduct the proxy
solicitation process as it did for the October 2009 special meeting
would have led an objective observer to question the integrity and
credibility of the MFDA in managing that process," the panel said.
The panel noted that the MFDA's board and executive had built the MFDA
into an effective and credible regulator of mutual fund dealers. It
went on to say, "It is important to state that our findings in this
matter are restricted to a narrow issue related to the MFDA's internal
governance," and "we are not making any adverse findings about the
MFDA's overall integrity or credibility as an SRO."
The panel also found that the MFDA board's decisions regarding two of
its former directors after the December 2008 annual general meeting
would not lead an objective observer to question the integrity or
credibility of the organization.
In its decision, the BCSC panel directed the MFDA to, among other
things, use a third party proxy solicitation firm to solicit proxies
instead of MFDA directors, officers and employees, and to keep member
votes confidential from MFDA officials. The panel also directed the
MFDA not to implement the amendments passed at the October 2009 meeting
until the members vote on those amendments at a meeting conducted in
accordance with its directions.
The B.C. Securities Commission is the independent provincial government
agency responsible for regulating trading in securities within the
province. You may view the ruling on our website www.bcsc.bc.ca by typing in the search box, Mutual Fund Dealers Association of Canada
or 2011 BCSECCOM 16. If you have questions, contact Ken Gracey, media
Learn how to protect yourself and become a more informed investor at www.investright.org
SOURCE British Columbia Securities Commission
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