Dealer fined $75,000 for failing to report misconduct

Nationwide dealer hit with MFDA and AMF fines for various compliance failures, including a lack of timely reporting on member wrongdoing

Dealer fined $75,000 for failing to report misconduct

PEAK Investment Services Inc. has settled with the MFDA, agreeing to pay a $75,000 fine and $15,000 costs for firm-wide failures to meet compliance requirements.

PEAK, which operates in all 10 provinces plus the Yukon and the Northwest Territories and is headquartered in Montreal, was found in 2016 not to have addressed compliance deficiencies found by a series of MFDA reviews. Between 2011 and 2017 the firm as a whole failed to submit mandatory reports to the MFDA on incidents of possible misconduct by its members, including unauthorized discretionary trading and personal financial dealings.

According to the settlement agreement, PEAK failed to report two of its approved persons to the MFDA after they had been terminated for cause. They failed to report another approved person in a timely manner even after PEAK imposed closer supervision on them as a result of regulatory violations. None of these events were reported to the MFDA within the alloted time frame.

After receiving a compliance report from the MFDA, PEAK agreed to make more timely reports of these events. However, between October 2014 and December 2017, 15 additional cases were discovered that ought to have been reported. They were not reported “on a timely basis,” according to the settlement agreement.

PEAK was also found not to have conducted timely supervisory investigations after discovering 10 of its approved persons had engaged in misconduct, including unauthorized trading, personal financial dealings, engagement in undisclosed outside activities, and alleged misappropriation of client funds.

The MFDA settlement agreement also says that PEAK failed to conduct on-site branch reviews at 35 of PEAK’s 102 business locations, in contravention of MFDA rules requiring on-site reviews every three years.

In addition to the $75,000 fine and $15,000 costs from the MFDA, PEAK had been disciplined by Quebec’s securities regulator the Autorité des marchés financiers (AMF), paying them a fine, in 2018, of $200,000 and costs of $20,000 which was considered an ameliorating factor in the MFDA's ruling.