August 29, 2018 (Toronto, Ontario) – A settlement hearing in the matter of Sentinel Financial Management Corp. (“Respondent”) was held yesterday in Saskatoon, Saskatchewan before a three-member Hearing Panel of the Prairie Regional Council of the Mutual Fund Dealers Association of Canada (“MFDA”).
The Hearing Panel approved the settlement agreement dated August 9, 2018 (“Settlement Agreement”) between Staff of the MFDA and the Respondent, as a consequence of which the following sanctions were imposed:
- a fine in the amount of $75,000;
- costs in the amount of $10,000; and
- 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 2.2.1(a), 2.2.1(c), 2.2.2, 2.5.1, and MFDA Policies No. 2 and 5.
In the Settlement Agreement, the Respondent admitted that:
- between July 2012 and July 2016, it failed to adequately conduct proper Tier 1 trade supervision to:
- ensure that each order accepted and each recommendation made for client accounts, including client accounts holding exempt market products, were suitable for the clients and in keeping with those clients’ investment objectives and “Know Your Client” information; and
- perform supervisory inquiries, either adequately or at all, and failed to maintain adequate records of trade supervision conducted including inquiries made, responses received, and resolutions achieved following supervisory inquiries, including with respect to exempt market products,
contrary to MFDA Rule 2.2.1(c), and MFDA Policy No. 2;
- commencing in April 2013, it failed to adequately supervise the activity of an Approved Person, JW, who was under close supervision, including activity with respect to deficiencies in trade suitability and the collection of “Know Your Client” information, contrary to MFDA Rules 2.5.1, 2.2.1(a), 2.2.1(c), and 2.2.2;
- commencing in June 2015, it failed to adequately supervise the activity of an Approved Person, TM, who was under close supervision, including activity with respect to deficiencies in trade suitability and the collection of “Know Your Client” information, contrary to MFDA Rules 2.5.1, 2.2.1(a), 2.2.1(c), and 2.2.2; and
- commencing in July 2012, it failed to complete reviews of sub-branches and their Approved Persons, either adequately or at all, contrary to MFDA Policy No. 2 and MFDA Policy No. 5.
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.