MFDA issues Notice of Settlement Hearing in respect of Scotia Securities Inc.

TORONTO, Dec. 19, 2022 /CNW/ - The Mutual Fund Dealers Association of Canada (the "MFDA") announced that it has issued a Notice of Settlement Hearing dated December 19, 2022, regarding the presentation, review and consideration of a proposed settlement agreement by a Hearing Panel of the MFDA's Central Regional Council.

The settlement agreement will be between Staff of the MFDA and Scotia Securities Inc. (the "Respondent") and involves matters for which the Respondent may be disciplined by a Hearing Panel pursuant to MFDA By-laws. The proposed settlement agreement concerns allegations that the Respondent:

a)  prior to April 2020, failed to implement adequate policies and procedures and an adequate system of controls and supervision to ensure that its Approved Persons processed certain transactions as switches, rather than as redemptions and purchases, which resulted in the Approved Persons receiving increased performance credits which counted toward their sales targets, contrary to MFDA Rules 2.5.1 and 2.1.1 and MFDA Policy No. 2;

b)  prior to January 2021, failed to implement adequate policies and procedures and an adequate system of controls and supervision to prevent its Approved Persons from establishing and subsequently cancelling pre-authorized contribution plans without adequate evidence of client authorization, which resulted in some of the Approved Persons receiving increased performance credits which counted toward their sales targets, contrary to MFDA Rules 2.5.1 and 2.1.1 and MFDA Policy No. 2;

c)  prior to July 2021, failed to implement adequate policies and procedures and an adequate system of controls and supervision to prevent its Approved Persons from manually adjusting their sales results, which resulted in some of the Approved Persons receiving increased performance credits which counted toward their sales targets, contrary to MFDA Rules 2.5.1 and 2.1.1;

d)  between March 2020 and July 2020, at the onset of the COVID-19 pandemic, failed to implement adequate policies and procedures and an adequate system of controls and supervision to ensure that it provided redemption cheques to clients in a timely manner, contrary to MFDA Rules 2.5.1 and 2.1.1;

e)  prior to April 13, 2021, failed to implement adequate policies and procedures and an adequate system of controls and supervision to ensure that clients did not purchase certain mutual funds in non-registered accounts which, according to the funds' simplified prospectuses and fund facts documents, were not suitable to be held in such accounts, contrary to MFDA Rules 2.2.1, 2.5.1 and 2.1.1; and

f)  between November 24, 2021 and February 9, 2022, failed to ensure that some client account transfer requests that were sent to one of its fax servers were processed in a timely manner, contrary to MFDA Rules 2.5.1 and 2.1.1.

The settlement hearing will take place electronically by videoconference on December 21, 2022, commencing at 11:00 a.m. (Eastern), or as soon thereafter as the matter can be held. Members of the public who would like to obtain further particulars should contact hearings@mfda.ca.

MFDA settlement hearings are typically held in the absence of the public pursuant to section 20.5 of MFDA By-law No. 1 and Rule 15.2(2) of the MFDA Rules of Procedure. If the Hearing Panel accepts the settlement agreement, then the proceeding will become open to the public and a copy of the decision of the Hearing Panel and the settlement agreement will be made available at www.mfda.ca.

A copy of the Notice of Settlement Hearing is available on the MFDA website at www.mfda.ca.

The MFDA is the self-regulatory organization for Canadian mutual fund dealers, regulating the operations, standards of practice and business conduct of its Members and their approximately 76,695 Approved Persons with a mandate to protect investors and the public interest. For more information about the MFDA's complaint and enforcement processes, as well as links to 'Check an Advisor' and other Investor Tools, visit the For Investors page on the MFDA website.

SOURCE Mutual Fund Dealers Association of Canada

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