Registrant Responsibilities

Suryono is unclear about Mutual Fund Dealers Association (MFDA) rules regarding client communications, and seeks your help. Which of the following statements about MFDA client communication rules is CORRECT?

MFDA rules regarding client communications refer to written communication.

MFDA rules regarding client communications refer to either written or verbal communication.

Verbal communication to clients must be documented by the dealing representative.

Trade communications and account statements, although written communications are not defined as client communications.

Josh has a client, Arnold, who read somewhere about the Client Relationship Model (CRM). He asks Josh about the objective of the relationship disclosure requirement of CRM. Which of the following replies should Josh give to Arnold?

The requirement authorizes dealer firms to disclose their client-planner relationship to third parties.

The requirement requires clients to understand their obligations and those of the dealer firm.

The requirement requires clients to disclose all the information asked for by the dealing representative.

There are different levels of disclosures depending on the type and scope of services required by the client.

Which of the following practices is acceptable?

It is advisable to keep blank forms signed by clients in their files in case they are unavailable for signature.

Excessive trading may be permissible as long as it is in the client's best interest.

Outside business activities like selling securities are permissible as long as you conduct it outside the mutual fund dealer.

It is advisable for you to obtain a power of attorney (POA) on all your clients to make transactions easier to fulfill.

Which of the following statements about excessive trading is correct?

It is a practice that is permitted by the Mutual Fund Dealers Association (MFDA) but only for high net worth clients.

It is a practice that provides little economic benefit to the client and only benefits the representative.

It is the charging of huge fees to clients while executing few trades and giving little advice.

It is an acceptable sales practice for commission-based accounts.

All of the following individuals are registered as dealing representatives with mutual fund dealers. They also have outside business activities. Which individual has engaged in an inappropriate outside business activity?

Mohamed, who is licensed to sell insurance with an insurance company

Don, who along with his family owns several rental units

Ruben, who sells limited partnerships directly for an issuer

Lorenzo, who coaches part-time for his son's hockey team

Which of the following rules pertain to your registration as a mutual fund dealing representative?

You must be registered in the province in which you wish to sell mutual funds by the appropriate provincial securities regulatory authority. You are not permitted to be registered in a province where you do not reside.

You cannot begin to sell securities until you have received formal confirmation from the Mutual Fund Dealers Association of Canada (MFDA) that your application for registration has been approved and registration granted.

The securities regulatory authority must be informed of any material or significant change in your personal circumstances.

You are responsible for filing your application for registration through the National Registration Database (NRD).

How often must you renew your registration?

You must renew your registration every year.

You must renew your registration every two years.

You must renew your registration every three years.

There is no requirement to renew your registration.

Which of the following statements about the use of forms pre-signed by your clients is TRUE?

They are a good way to save time when your client wishes to perform a transaction.

They may only be used for high value transactions with high net worth clients.

They are prohibited by MFDA regulations.

They may be used provided a suitability assessment is performed at some time.

Henry is a dealing representative with ABC123 Mutual Funds Inc. One of his clients, Sophie, is currently going through a divorce. Sophie’s husband Trevor also holds an account with the mutual fund dealer, handled by another dealing representative at a different branch. Sophie asks Henry to give her a printout of Trevor’s transaction history for the past six months. Henry refuses to give a printout, but offers to look up Trevor’s account on his computer and give her the major details verbally. Has Henry acted unethically?

Since Henry did not give Sophie a printout of Trevor’s account, he has acted ethically.

Since he did not receive any direct or indirect compensation, Henry’s actions are ethical.

Henry has acted unethically by reviewing an account for a client of his company for whom he is not the dealing representative.

Since it is common practice at the mutual fund dealer to access client accounts, Henry’s actions are considered ethical.

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