Advisor banned for unauthorized trading

Remorseful dealing rep mistakenly believed he could exercise discretion to process switches, fined $35,000

Advisor banned for unauthorized trading

A dealing rep with Sun Life Financial Investment Services has been banned for two months and fined $35,000 for unauthorized discretionary trading.

At an MFDA hearing, Stefano Arena admitted that, between June 2016 and May 2018, he processed switches on behalf of clients using his discretion to determine the timing and amount despite member firm’s rules prohibiting him from doing so without prior client approval.

In that two-year period, Arena engaged in discretionary trading by processing approximately 1,062 switches from money market to equity mutual funds on behalf of 36 clients. While the respondent told the hearing he had discussed and agreed with clients which equity mutual funds were to be purchased as part of the portfolio, as well as the total amount, he did not maintain sufficient notes of these discussions.

He said the switches were done in order to achieve a lower average cost for the equity mutual fund units by attempting to purchase them at times where the market price had decreased.

Audit letters to all clients whose accounts were serviced by Arena did not raise any complaints or concerns about the transactions. There is no evidence he received any financial benefit from engaging in the misconduct described or that clients suffered any losses.

Arena said he “mistakenly believed that the Limited Trading Authorization provided by clients permitted him to exercise discretion to process the switches as described above”. He expressed remorse for his actions.

Arena must also pay costs of $5,000.

 

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