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MFDA seeks changes to its investigative powers

The proposals would harmonize rules with IIROC



The Mutual Fund Dealers Association of Canada (MFDA) is proposing rule changes designed to beef up its powers to investigate possible misconduct.


In a notice published Thursday, the self-regulatory organization (SRO) proposed a series of changes aimed at updating and clarifying the MFDA’s rules, and harmonizing with the other industry SRO, the Investment Industry Regulatory Organization of Canada (IIROC).

The MFDA said the revisions are intended to ensure that its rules “reflect current MFDA practices and provides the MFDA with appropriate examination and enforcement powers.”


The changes would help maintain investor protection by harmonizing the MFDA’s examination and investigation powers with IIROC’s powers, the notice said.


Among other things, the proposals would establish that MFDA investigators have the power to enter a dealer’s offices without notice and to copy electronic records.

“The ability to access systems would be of assistance, for example, where there is a concern about preservation of evidence,” the notice said.


“In enforcement investigations, MFDA investigation staff access electronic systems and take images of computer hard drives in situations involving allegations of serious misconduct where there are concerns about being able to obtain full access to records by other means.”


The proposed revisions would also clarify the obligations of dealers and reps to cooperate with the SRO’s investigations.


The proposed amendments were approved by the MFDA board on Feb. 27. They are now out for a 90-day public comment period.