MFDA finds BC advisor overreached in opening and trading in account without client's say-so
The Mutual Fund Dealers Association of Canada (MFDA) has fined a BC-based dealing representative who was too proactive in opening a TFSA for a client.
In the Reasons for Decision document, the MFDA said Kosal Vibhav Sunkara has been a registered dealing representative with Scotia Securities since March 2018.
On January 31, 2019, he met with a client to discuss the possibility of opening a TFSA for him and his wife, who was also a client of Sunkara’s. At that time, they arranged a follow-up meeting where he and the couple would speak further about opening a TFSA for each of them.
A few weeks later on February 20, the wife met with Sunkara at the branch and said her husband couldn’t attend. After some discussion, Sunkara opened a TFSA for her, then obtained information pertaining to the husband’s risk tolerance, time horizon, investment objectives, and other KYC information from her.
He also processed an initial purchase of a mutual fund in the husband’s TFSA, and set up a monthly pre-authorized contribution of $1,000 in the account. At no point did Sunkara obtain his authorization to open a TFSA, purchase a mutual fund, or set up a PAC on his behalf.
“[T]he Respondent states that it was his understanding that LL would come to the branch the next morning to sign the documents required to authorize the account opening and transactions. That never happened,” the MFDA said.
The seriousness of Sunkara’s actions became apparent several weeks later on March 13 and 16, when the husband contacted the firm to complain that he had not given his authorization to open a TFSA, and did not authorize the $500 trade or setting up of the PAC. Over the next two weeks, Scotia Securities reversed the trade, cancelled the PAC, and closed the TFSA account on his instruction.
On June 13, the firm issued a warning letter to Sunkara and placed him under close supervision.
The MFDA found no evidence that he benefited financially from opening the account without his client’s consent, or that the client suffered financial harm as a result.
Sunkara has been ordered to pay $10,000, consisting of a $7,500 fine and $2,500 in costs.
