July 7, 2017 (Toronto, Ontario) – A settlement hearing in the matter of TeamMax Investment Corporation (the “Respondent”) was held on March 3, 2017 in Toronto, Ontario before a Hearing Panel of the Central Regional Council of the Mutual Fund Dealers Association of Canada (“MFDA”). The Hearing Panel has approved the Settlement Agreement (“Settlement Agreement”) between Staff of the MFDA and the Respondent, and has issued its Decision and Reasons.
In its Decision and Reasons dated July 7, 2017, the Hearing Panel imposed the following sanctions on the Respondent:
- The Respondent shall pay a fine in the amount of $60,000, with $10,000 payable upon the acceptance of the Settlement Agreement and the balance being paid in 5 monthly instalments of $10,000 each;
- The Respondent shall pay costs in the amount of $10,000 upon the acceptance of the Settlement Agreement;
- The Respondent acknowledges that, having regard to the size of its business, its ultimate designated person (“UDP”) shall not be appointed as the Chief Compliance Officer (“CCO”), perform the day-to-day compliance duties and functions of the CCO, or perform other day-to-day compliance functions and duties (beyond fulfilling his duties and functions as UDP), without the prior written consent of Staff; and
- The Respondent shall in the future comply with all MFDA By-laws, Rules and Policies, and all applicable securities legislation and regulations made thereunder, including MFDA Rules 1.2.1(c), 1.2.5(a)(iii), 2.1.1, 2.1.2, 2.2.1, 2.5, 2.10, and MFDA Policies No. 2, 3 and 5.
In the Settlement Agreement, the Respondent admitted the following:
- Between August 2010 and April 2014, the Respondent failed to respond, or provided untimely, incomplete or inadequate responses, to requests for information and documents requested by Staff during the course of compliance examinations, contrary to MFDA Rules 1.2.5(a)(iii) and 2.1.1.
- Between September 2009 and April 2014, the Respondent failed to establish, implement and maintain adequate policies and procedures to supervise leveraging recommendations and ensure the suitability of leveraging recommendations made by Approved Persons to clients, contrary to MFDA Rules 2.2.1, 2.5 and 2.10 and MFDA Policy No. 2.
- Commencing October 2011, the Respondent failed to conduct a historical leveraging review of the Respondent’s leveraged client accounts to identify and correct deficiencies identified by Staff relating to those leveraged client accounts, contrary to MFDA Rules 1.2.5(a)(iii), 2.2.1 and 2.1.1.
- Between September 2009 and July 2015, the Respondent failed to implement a supervisory structure for the Respondent compliant with the requirements set out in MFDA Policies No. 2 and 5, and failed to effectively discharge the supervisory obligations prescribed by MFDA Rule 2.5, contrary to MFDA Rules 2.5 and MFDA Policies No. 2 and 5, and the 2014 Order.
- Between, August 2010 and April 2014, the Respondent failed to regularly update the Respondent’s policies and procedures manual, contrary to MFDA Rule 2.10 and MFDA Policy No. 2;
- Between March 2010 and July 2015, the Respondent failed to implement a Branch Review Program compliant with the requirements set out in MFDA Policy No. 5.
- Between March 2010 and July 2015, the Respondent failed to adequately detect and query patterns in the KYC information collected from clients by three Approved Persons: EYCQ, MF and HHYZ, contrary to MFDA Rule 2.2.1 and MFDA Policy No. 2.
- Between March 2010 and July 2015, the Respondent failed to conduct sufficient supervisory activities of its Approved Persons’ OBAs, contrary to MFDA Rule 1.2.1(c).
Copies of the Decision and Reasons and the Settlement Agreement are available on the MFDA website at www.mfda.ca. During the period described in the Decision and Reasons, the Respondent was registered as a mutual fund dealer in the provinces of British Columbia and Ontario.
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 83,000 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.