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Regarding exempt securities, MFDA members must ensure that the product actually meets the requirements of the regulatory exemption its issuers and promoters claim. The onus is on the member firm to resolve any questions as to whether or not the exemption applies.
“In addition, all local rules and applicable registration requirements of the relevant securities regulatory authorities must be satisfied prior to selling the securities,” the notice said. “These conditions may vary significantly between jurisdictions and may include proficiency requirements, notice to or specific approval from regulators or amendment of the member’s registration.”
The fact that an investor qualifies as “sophisticated” or “accredited” does not free their advisor from their responsibility for assessing suitability of an exempt security. Members are also expected to provide adequate information to clients to ensure they are making informed decisions.
Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com
(11/01/05)
Regarding exempt securities, MFDA members must ensure that the product actually meets the requirements of the regulatory exemption its issuers and promoters claim. The onus is on the member firm to resolve any questions as to whether or not the exemption applies.
“In addition, all local rules and applicable registration requirements of the relevant securities regulatory authorities must be satisfied prior to selling the securities,” the notice said. “These conditions may vary significantly between jurisdictions and may include proficiency requirements, notice to or specific approval from regulators or amendment of the member’s registration.”
The fact that an investor qualifies as “sophisticated” or “accredited” does not free their advisor from their responsibility for assessing suitability of an exempt security. Members are also expected to provide adequate information to clients to ensure they are making informed decisions.
Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com
(11/01/05)
Regarding exempt securities, MFDA members must ensure that the product actually meets the requirements of the regulatory exemption its issuers and promoters claim. The onus is on the member firm to resolve any questions as to whether or not the exemption applies.
“In addition, all local rules and applicable registration requirements of the relevant securities regulatory authorities must be satisfied prior to selling the securities,” the notice said. “These conditions may vary significantly between jurisdictions and may include proficiency requirements, notice to or specific approval from regulators or amendment of the member’s registration.”
The fact that an investor qualifies as “sophisticated” or “accredited” does not free their advisor from their responsibility for assessing suitability of an exempt security. Members are also expected to provide adequate information to clients to ensure they are making informed decisions.
Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com
(11/01/05)
Regarding exempt securities, MFDA members must ensure that the product actually meets the requirements of the regulatory exemption its issuers and promoters claim. The onus is on the member firm to resolve any questions as to whether or not the exemption applies.
“In addition, all local rules and applicable registration requirements of the relevant securities regulatory authorities must be satisfied prior to selling the securities,” the notice said. “These conditions may vary significantly between jurisdictions and may include proficiency requirements, notice to or specific approval from regulators or amendment of the member’s registration.”
The fact that an investor qualifies as “sophisticated” or “accredited” does not free their advisor from their responsibility for assessing suitability of an exempt security. Members are also expected to provide adequate information to clients to ensure they are making informed decisions.
Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com
(11/01/05)
Regarding exempt securities, MFDA members must ensure that the product actually meets the requirements of the regulatory exemption its issuers and promoters claim. The onus is on the member firm to resolve any questions as to whether or not the exemption applies.
“In addition, all local rules and applicable registration requirements of the relevant securities regulatory authorities must be satisfied prior to selling the securities,” the notice said. “These conditions may vary significantly between jurisdictions and may include proficiency requirements, notice to or specific approval from regulators or amendment of the member’s registration.”
The fact that an investor qualifies as “sophisticated” or “accredited” does not free their advisor from their responsibility for assessing suitability of an exempt security. Members are also expected to provide adequate information to clients to ensure they are making informed decisions.
Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com
(11/01/05)
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The MFDA is repeating a familiar refrain, reminding its registrants that knowing their client is not enough in judging suitability; they also need to understand the investments they are recommending.
“Know-your-client requirements are a fundamental part of meeting basic suitability obligations,” the MFDA said in a recent regulatory notice. “However, these obligations can only be properly discharged if approved persons and supervisory staff of the member also fully understand the products that are being recommended to clients.”
The SRO allows that for the typical mutual fund, due diligence might not require the extensive review that a new or novel investment strategy might deserve. The fact that other firms are already offering the same product is not sufficient reason to include it on a list of approved products, as this doesn’t guarantee that it is suitable for a given client.
The MFDA also warns that issuers and promoters of funds should not be solely relied upon.
“Members are advised that simply making inquiries will not be sufficient to discharge their responsibility to conduct due diligence,” the notice said. “Members must properly follow up on any questions they have raised until they have been satisfied that they have a complete understanding of the products they propose to sell.”
Members must develop their own investor profile for which the product would be generally suitable — or not suitable — taking into account risk levels, time horizon, income and net worth.
Once the product is listed as an approved product, reps must follow the suitability guidelines and not recommend the product to investors for whom it has been deemed unsuitable.
Due diligence is not a one time affair, either, as changing market conditions can affect the risks associated with some products, making them unsuitable for some investors.
The MFDA reminds its member firms that they must have written guidelines in place, describing the official due diligence process. According to the MFDA, proper due diligence on an investment product includes:
Regarding exempt securities, MFDA members must ensure that the product actually meets the requirements of the regulatory exemption its issuers and promoters claim. The onus is on the member firm to resolve any questions as to whether or not the exemption applies.
“In addition, all local rules and applicable registration requirements of the relevant securities regulatory authorities must be satisfied prior to selling the securities,” the notice said. “These conditions may vary significantly between jurisdictions and may include proficiency requirements, notice to or specific approval from regulators or amendment of the member’s registration.”
The fact that an investor qualifies as “sophisticated” or “accredited” does not free their advisor from their responsibility for assessing suitability of an exempt security. Members are also expected to provide adequate information to clients to ensure they are making informed decisions.
Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com
(11/01/05)
|
The MFDA is repeating a familiar refrain, reminding its registrants that knowing their client is not enough in judging suitability; they also need to understand the investments they are recommending.
“Know-your-client requirements are a fundamental part of meeting basic suitability obligations,” the MFDA said in a recent regulatory notice. “However, these obligations can only be properly discharged if approved persons and supervisory staff of the member also fully understand the products that are being recommended to clients.”
The SRO allows that for the typical mutual fund, due diligence might not require the extensive review that a new or novel investment strategy might deserve. The fact that other firms are already offering the same product is not sufficient reason to include it on a list of approved products, as this doesn’t guarantee that it is suitable for a given client.
The MFDA also warns that issuers and promoters of funds should not be solely relied upon.
“Members are advised that simply making inquiries will not be sufficient to discharge their responsibility to conduct due diligence,” the notice said. “Members must properly follow up on any questions they have raised until they have been satisfied that they have a complete understanding of the products they propose to sell.”
Members must develop their own investor profile for which the product would be generally suitable — or not suitable — taking into account risk levels, time horizon, income and net worth.
Once the product is listed as an approved product, reps must follow the suitability guidelines and not recommend the product to investors for whom it has been deemed unsuitable.
Due diligence is not a one time affair, either, as changing market conditions can affect the risks associated with some products, making them unsuitable for some investors.
The MFDA reminds its member firms that they must have written guidelines in place, describing the official due diligence process. According to the MFDA, proper due diligence on an investment product includes:
Regarding exempt securities, MFDA members must ensure that the product actually meets the requirements of the regulatory exemption its issuers and promoters claim. The onus is on the member firm to resolve any questions as to whether or not the exemption applies.
“In addition, all local rules and applicable registration requirements of the relevant securities regulatory authorities must be satisfied prior to selling the securities,” the notice said. “These conditions may vary significantly between jurisdictions and may include proficiency requirements, notice to or specific approval from regulators or amendment of the member’s registration.”
The fact that an investor qualifies as “sophisticated” or “accredited” does not free their advisor from their responsibility for assessing suitability of an exempt security. Members are also expected to provide adequate information to clients to ensure they are making informed decisions.
Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com
(11/01/05)
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