MFDA imposed $4.3 million in fines amid increased proceedings

There has been a rise in proceedings by the Mutual Fund Dealers Association of Canada but fewer new cases

MFDA imposed $4.3 million in fines amid increased proceedings
Steve Randall

Enforcement action by the Mutual Fund Dealers Association of Canada remained robust in 2021, including an increase in fines.

As it prepares to become one half of the investment industry’s new single self-regulatory organization (SRO), the MFDA’s newly-published enforcement report shows that it commenced 91 disciplinary proceedings and closed 95, with fines against members and approved persons totalling more than $4.3 million plus costs of $433,163.

There were fewer new cases opened last year (414) than in 2020 (461) but proceedings were up from 79 and while fines increased from $3.5 million in the previous year, they were well below 2019’s total of $9.3 million.

The collection rate for fines also increased, from 29% in 2020 to 45% in 2021. This is significantly higher than the 16% of the total of $105 million in fines issued by the MFDA since 2004.

The nature of the top 5 primary allegations made in cases opened at the case assessment stage were:

  • Business standards
  • Suitability of investments
  • Unauthorized/discretionary trading
  • Transfer of accounts
  • Pre-signed forms

Banned or suspended

There were 19 permanent bans and 35 suspensions issued in 2021, up from 16 and 24 respectively in the prior year. Four educational course requirements were issued.

"I am pleased to present the Annual Enforcement Report for 2021 which sets out the accomplishments of the MFDA Enforcement Department which continues to effectively fulfill its investor protection mandate by holding those who breach MFDA rules accountable," said MFDA President and CEO Mark Gordon.

Along with IIROC, which also boosted its enforcement action in the most recent period, the MFDA will form the new SRO which will be led by IIROC chief Andrew J. Kriegler as its CEO.