You’ve all been there. Too much to do and so little time. Shortcuts are something the MFDA have shown zero tolerance for.
In the bigger picture the MFDAs announcement Monday that a three-person Hearing Panel had accepted a settlement agreement with Jarnail Kahlon, an advisor with MFDA member Investia Financial Services Inc., isn’t a big deal.
Kahlon’s settlement amounts to a fine of $5,000 and $2,500 in costs payable. It’s hardly noteworthy when just 10 days earlier an MFDA Hearing Panel imposed sanctions against a respondent that included a five-year ban from conducting any securities related business with an MFDA member, a $25,000 fine and costs payable of $7,500.
The respondent in this case, Edward S. Brown, agreed to the statement of facts which essentially states that the former Newfoundland advisor failed to adequately explain the risks of a leveraged investment to nine clients as well as failing to take into account the know-your-client information on those clients.
The background in this latest MFDA settlement is quite a bit different.
The former advisor who was registered as a mutual fund salesperson with Investia between September 2009 and June 9, 2014, kept 21 blank pre-signed trade forms on file for 16 clients over a 21-month period.
Essentially his actions amount to a case of unauthorized trading contrary to MFDA Rule 2.1.1. Although none of the clients had a problem with Kahlon’s activity, he nonetheless contravened an MFDA rule, hence the fine.
Kahlon was registered as an advisor for almost 13 years. He should have known better.
However, it appears in this particular situation that he simply failed to get limited trading authorizations for these 16 clients which would have allowed him to execute trades based upon instructions received by telephone.
With CRM2 around the corner these kinds of bad practices and oversights aren’t likely to be swept under the carpet for too much longer.
There’s a lesson to be learned in this relatively inconsequential hearing.