Weekly Wrap: The Regulator Beat

Weekly Wrap: The Regulator Beat

Weekly Wrap: The Regulator Beat

MFDA investigations on the rise in 2013
The Mutual Fund Dealers Association of Canada (MFDA) reported Thursday that enforcement activity was up last year with an increase in investigations, hearings and sanctions
handed out. The self-regulatory organization confirmed that 113 cases, up from 105 in 2014, were referred to investigators in 2013, while 65 disciplinary hearings took place, up from 48 in 2012 and 36 in 2011. Hearings were also up with 47 cases resolved in 2013, up from 42 in 2012; resulting in 21 permanent prohibitions, 11 suspensions, $10.85 million in fines, and $243,500 in costs imposed upon reps and dealers. Just $3.6 million in fines, and about $253,500 in costs, were generated in 2012. The MFDA also noted that its continues to prioritize complaints involving seniors and other vulnerable groups, as well as violations including the inappropriate use of leverage, falsified client signatures, the use of blank signed form  and undisclosed outside business interests.

Analyst bannned from trading by OSC

The Ontario Securities Commission (OSC) has banned an independent equity analyst from trading for three years and registration for one year under an agreed settlement. Alka Singh and her company Mine2Capital Inc., which prepared and sold research reports to mining companies for investors, were using an inappropriate exemption to condcut business, and owned shares in some of the firms serviced. The settlement indicates that, despite this, Singh did not profit from owning shares and in some cases, lost money on trades. The company also sold very few reports, but did provide advice in securities without being registered or possessing the proper exemption. Singh must pay $5,000 in costs, and is prohibited from becoming a director, officer of an issuer, registrant, or investment fund manager for one year.

U.S. and Canadian regulators sign cross-border MOU
Canada's four securities regulators and U.S. derivatives regulators have signed an memorandum of understanding to improve cross-border supervision of firms that do business in both countries. The U.S. Commodity Futures Trading Commission (CFTC) and regulators in Ontario, B.C. and Alberta will exchange information about markets and organized trading platforms, central counterparties, trade repositories, and intermediaries, dealers, and other market participants. The agreement is meant to further protect investors and customers, while "fostering the integrity of and maintaining confidence in financial markets; and reducing systemic risk."

CSA proposes strengthening Fund Fact requirements
Fund dealers may be required to deliver new mutual fund disclosure documents prior to the investor making a purchase, if a new CSA proposal is approved. The Canadian Securities Administrators (CSA) issued the proposed amendments to its Mutual Fund Prospectus Disclosure, which adds point-of-sale delivery of Fund Facts - a simplified, plain language disclosure document. As of June 2014, the prospectus will require fund mangers to deliver the Fund Facts document within two days of the purchase, while this proposal would tighten the rules by requiring pre-sale delivery of the document.


Israeli bank agrees to pay $500K
The Ontario Securities Commission (OSC) and the Bank Leumi Le Israel B.M. have reached a settlement, after the bank admitted to trading without proper registration in Ontario. The bank agreed to pay $500,000 to the OSC and either rely on international dealer exemption or seek registration in Ontario of it wants to continue engaging in trading activities. The accusations came about following a compliance review by the OSC and Quebec's Autorité des marchés financiers (AMF), which determined that foreign bank had opened accounts for Ontario residents and engaged in trading and advising without an exemption or registration. The OSC notes that the bank ceased opening accounts and closed existing accounts coming into compliance with Ontario regulation. It also cooperated with the OSC during the investigation.

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Weekly Wrap: The Regulator Beat

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Weekly Wrap: From the Regulators