TORONTO, May 27, 2015 /CNW/ - A Hearing Panel of the Central Regional Council of the Mutual Fund Dealers Association of Canada ("MFDA") has issued its Reasons for Decision in connection with a settlement hearing held in Toronto, Ontario on April 13, 2015 in the matter of Equity Associates Inc. (the "Respondent"). The Reasons for Decision relate to the Hearing Panel's acceptance of the settlement agreement (the "Settlement Agreement") entered into between the Respondent and Staff of the MFDA. In its Reasons for Decision dated May 27, 2015, the Hearing Panel confirmed the sanctions imposed on the Respondent:
- payment of a fine in the amount of $40,000;
- payment of costs in the amount of $10,000; and
- shall in future comply with MFDA Rules 2.2.1, 2.2.2, 2.2.3, 2.1.1 and MFDA Policy No. 3 and the Respondent shall uphold the standard of conduct in the industry in accordance with MFDA Rule 2.1.1.
In furtherance of the Settlement Agreement, the Respondent also made a payment of $50,000 as part of the terms of settlement of a civil claim that clients DH and EH commenced against the Respondent with respect to the same issues that gave rise to this disciplinary proceeding.
In the Settlement Agreement, the Respondent admitted that:
1) on or about July 4, 2008, it opened two new joint accounts for clients DH and EH without ensuring that:
(a) it obtained a New Account Application Form or other form documenting the Know-Your-Client information applicable to each of the two new joint accounts in a manner which conformed with the requirements of MFDA Rule 2.2.1, contrary to MFDA Rules 2.2.2 and 2.1.1; and
(b) a designated trading partner, director or officer, approved the opening of the new joint accounts prior to or promptly after the completion of the initial transactions in the accounts, contrary to MFDA Rules 2.2.3 and 2.1.1.
2) between July 4, 2008 and April 27, 2009, it failed to ensure that it learned the essential facts relative to two new joint accounts of clients DH and EH and failed to ensure that the orders that were accepted and the investment recommendations that were made in respect of the joint accounts of clients DH and EH were suitable for clients DH and EH, in keeping with their investment objectives, and within the bounds of good business practice, contrary to MFDA Rules 2.2.1 and 2.1.1; and
3) commencing in July 2009, it failed to ensure that a complaint by clients DH and EH concerning the losses they sustained in their joint accounts was handled promptly and fairly, contrary to MFDA Rules 2.1.1 and 2.11 and MFDA Policy No. 3.
Copies of the Reasons for Decision and the Settlement Agreement are available on the MFDA website at www.mfda.ca. During the period described in the Settlement Agreement, the Respondent carried on business in all Canadian provinces except for Saskatchewan.
The MFDA is the self-regulatory organization for Canadian mutual fund dealers, regulating the operations, standards of practice and business conduct of its 104 Members and their approximately 80,000 Approved Persons with a mandate to protect investors and the public interest. For more information about the MFDA's complaint and enforcement processes, as well as links to 'Check an Advisor' and other Investor Tools, visit the For Investors page on the MFDA website.
SOURCE Mutual Fund Dealers Association of Canada
For further information: Shaun Devlin, Senior Vice-President, Member Regulation, Enforcement, 416-943-4672, [email protected]