Scotia Securities faces million-dollar fine over advisor abuses, service failures

Over the same period, it discovered evidence that 73 of its approved persons manually adjusted their sales results on Scotia Securities’ sales tracking system to inflate their sales performance numbers.

Scotia also admitted to delays in issuing thousands of redemption cheques in or around the fall of 2020. After an investigation, it found that the delays were due to a business process set up in response to the COVID-19 pandemic-driven switch to remote work.

“As a temporary measure, the mailing of cheques was assigned to another operations department that continued to work onsite. This switch resulted in delays, which were not reported to the original department in a timely manner,” the agreement said. “The delivery of cheques by Canada Post during this period may have also contributed to the delay in clients receiving cheques.”

The firm also found between January 2015 and March 3031, nearly 3,000 clients saw unsuitable purchases of certain index funds offered by Scotia in their non-registered accounts. The distributions of those funds were considered as income rather than capital gains, exposing them to higher tax rates when received outside of a registered account.

“[T]he Respondent admits that it failed to put in place adequate controls to ensure that the Funds were not purchased in non-registered accounts,” the MFDA said.