While no clients were harmed or filed complaints, two advisors who used pre-signed forms and applied white out to change documents have each been fined $10,000.
In a settlement agreement released on October 30, the Mutual Fund Dealers Association (MFDA) announced that it had fined Murray Harold Wellman and Michael John Wellman $10,000 each.
Between 2011 and 2013, while they were advisors with FundEX in Kitchener-Waterloo, the Wellmans used white out to make changes to know-your-client and transaction forms. Although the MFDA notes that none of the changes resulted in complaints or client losses, the regulator says the Wellmans still acted in violation of their dealer's policies and procedures, which specifically forbade the use of liquid paper (i.e. white out, correction fluid) on any documentation.
In the course of their investigation, the MFDA also determined that the two advisors had obtained, and in some cases used, 29 pre-signed forms and one pre-signed cheque for 16 clients. In 2013, they also processed a trade in a client account without documenting the client's authorization. No clients suffered losses or complained as result of these actions, but the MFDA found that the advisors had acted contrary to MFDA Rule 2.1.1.
Besides the $10,000 fine, each advisor was also ordered to pay costs of $1000.