MFDA Hearing Panel approves settlement agreement with Equity Associates Inc.

TORONTO, June 21, 2018 /CNW/ - A settlement hearing in the matter of Equity Associates Inc. ("Respondent") took place yesterday in Toronto, Ontario before a Hearing Panel of the Central Regional Council of the Mutual Fund Dealers Association of Canada ("MFDA").

The Hearing Panel approved the settlement agreement dated April 30, 2018 ("Settlement Agreement") between Staff of the MFDA and the Respondent, as a consequence of which the following sanctions were imposed on the Respondent:

• a fine in the amount of $125,000 ("Fine");
• costs in the amount of $20,000 ("Costs");
• payment of the Fine and Costs shall be made to and received by MFDA Staff in certified funds as follows:

1. $82,500 (Fine and Costs) upon the acceptance of the Settlement Agreement;
2. $62,500 (Fine) no later than six months after the acceptance of the Settlement Agreement; and

• shall in the future comply with MFDA Rules 2.2.1, 2.2.2, 2.2.3, 2.5.1, 2.9, 2.10 and 5.1, and MFDA Policy No. 2 and No. 3.

In the Settlement Agreement, the Respondent admitted that:

1. during the period March 1, 2012 to September 30, 2014, it failed to adequately supervise, or failed to maintain adequate records of the supervision at its Head Office, sub-branch level, and branch level, of:
   
   
1. daily trading activity;
2. approval of new accounts;
3. approval of amendments to know-your-client information; and
4. leveraged accounts;
   
   contrary to MFDA Rules 2.2.1, 2.2.2, 2.2.3, 2.5.1, 2.9, and 5.1, and MFDA Policy No. 2;
   
   
2. during the period March 1, 2012 to September 30, 2014, it failed to establish, implement and maintain adequate policies and procedures to conduct trend analysis reports to supervise its Approved Persons' trading activity, contrary to MFDA Rules 2.2.1, 2.5.1, 2.9, and 2.10, and MFDA Policy No. 2;
3. during the period March 1, 2012 to September 30, 2014, it failed to maintain adequate compliance resources, contrary to MFDA Rules 2.5.1 and MFDA Policy No. 2;
4. during the period October 1, 2014 to July 31, 2016, it failed to adequately supervise, or failed to maintain adequate records of the supervision of:
   
   
1. uniformity of certain client KYC information; and
2. concentration of sector mutual funds in client accounts;
   
   contrary to MFDA Rules 2.2.1, 2.5.1, 2.9 and 5.1, and MFDA Policy No. 2;
   
   
5. commencing on or about August 19, 2014, it failed to conduct a reasonable supervisory investigation in response to information it received that its Approved Person, Gilles Latour, was charged with offences pursuant to the Criminal Code of Canada for alleged conduct involving clients and other individuals, contrary to MFDA Rules 2.5.1 and MFDA Policy No. 3; and
6. commencing May 2014, it failed to conduct a reasonable supervisory investigation regarding investment suitability concerns and portfolio concentration issues in the client accounts serviced by its Approved Person Lawrence Fike, contrary to MFDA Rule 2.5.1 and MFDA Policy No. 3.

A copy of the Settlement Agreement 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 82,000 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

Charles Toth, Director, Litigation, 416-943-4619, [email protected]

Related Links

http://www.mfda.ca