WHEREAS on August 5, 2020, the Mutual Fund Dealers Association of Canada (the “MFDA”) issued a Notice of Settlement Hearing pursuant to section 24.4 of By-law No. 1 in respect of Portfolio Strategies Corporation (the “Respondent”);
AND WHEREAS the Respondent entered into a settlement agreement with Staff of the MFDA, dated July 21, 2020 (the “Settlement Agreement”), in which the Respondent agreed to a proposed settlement of matters for which the Respondent could be disciplined pursuant to ss. 20 and 24.1 of By-law No. 1;
AND WHEREAS on the basis of admissions made by the Respondent in the Settlement Agreement, the Hearing Panel is of the opinion that:
- prior to July 18, 2017, the Respondent did not adequately supervise and prior to July 15, 2018, the Respondent did not establish, implement and maintain adequate supervisory policies and procedures with respect to, the reasonability of KYC information and the suitability of trades including consistency with KYC information, concentration in sector mutual funds and exempt market securities and the sale of DSC Mutual Funds to clients, contrary to MFDA Rules 2.5.1, 2.2.1, 5.1 and MFDA Policy No. 2.
- prior to December 2017, the Respondent faistyle=”listled to maintain a branch review program that ensured that an on-site compliance review of all of its branches and sub-branches was conducted at least once every three years, in accordance with the requirements set out in MFDA Rule 2.5.1 and MFDA Policy No. 5; and
- between March 31, 2015 and July 31, 2016, the Respondent did not maintain evidence of any nominee name reconciliations that were completed, contrary to MFDA Rules 2.9 and 5 and MFDA Policy No. 4.
IT IS HEREBY ORDERED THAT the Settlement Agreement is accepted, as a consequence of which:
- The Respondent shall pay a fine in the amount of $100,000, pursuant to s. 24.1.2(b) of MFDA By-law No. 1, payable as follows:
- $50,000 shall be paid on the date that the Settlement Agreement is accepted; and
- $50,000 shall be paid within 90 days of the date that the Settlement Agreement is accepted;
- The Respondent shall pay costs in the amount of $10,000, pursuant to s. 24.2 of MFDA By-law No. 1, payable on the date the Settlement Agreement is accepted; and
Sherri WalshSherri WalshChair
Charlene SnellCharlene SnellIndustry Representative
Adam DudleyAdam DudleyIndustry Representative