August 2, 2018 - SUN LIFE - MISCONDUCT - MUTUAL FUNDS

Sun Life clients may have suffered losses as a result of unsuitable leveraging, investments and DSC (deferred sales charges) fees.

Some Sun Life clients are receiving complex “remediation” offers and only have a short time to make decisions. Investors need to know their legal and investment rights.  Investors should understand what they are giving up by signing documents.  Investors should not sign the documents sent to them by Sun Life without a full understanding of the implications.

The Mutual Fund Dealers Association (MFDA) has investigated Sun Life Financial Services (Canada) Inc. for breaches in their sales and compliance methods. Sun Life has admitted misconduct including breaches involving their entire book of business.   That means all their clients.  

The Sun Life misconduct identified by the MFDA include:

  • unsuitable arrangements for clients to buy mutual funds with borrowed money. (Leveraging)
  • inadequate supervision of concentration risk where concentration limits in client accounts exceeded Sun Life policies and procedures.  This was also the subject of a prior MFDA investigation.
  • use of Deferred Sales Charges (DSC) without considering client’s age or time horizon. This locks clients into investments with high fees and may not have been disclosed to them.
  • unsuitable “switches”, which is selling and buying funds to generate commissions at the expense of clients’ accounts, since it affects performance.
  • potential changes to documents (Know Your Client (KYC)).
  • Sun Life’s approval of sales incentives which breached securities regulation since incentives could influence the recommendations made by advisors.

The release form that Sun Life requires investors to sign to obtain partial compensation for its misconduct should not be signed without understanding the agreement and its ramifications. If investors are considering an offer by Sun Life, they should consider obtaining legal advice from a lawyer before signing these legal documents.   

Read the Reasons for Decision from the Mutual Fund Dealers Association of Canada (Re: Sun Life Financial Investment Services (Canada) Inc.)

June 29, 2018

MBC extends its congratulations and best wishes to Lindsey Park who was elected to the Provincial Legislature in the 2018 Provincial Election.  She has also been appointed as the parliamentary assistant to the attorney general.

We wish Lindsey all the best in her new endeavour. 

In the world of Occupational Health and Safety Act (“OHSA”) violations, the Crown (the Ministry of Labour) essentially only has to prove that the act or incident occurred. Given that charges are usually laid only where an accident has taken place, proving that an act contrary to the OHSA has occurred is usually not difficult to do. There is no mens rea or intent required, as would be the case for any criminal conviction. Your motives can be innocent but if the act occurred, the Crown’s burden has been met.

The only defence thereafter is that of due diligence. Due diligence is proving that you took all reasonable and required steps to ensure that your company is complying with the OHSA, and/or that your company is ensuring that the incident in question would not occur.

The Crown generally takes the position that specific due diligence is required for the act complained of, and that this due diligence is rarely, if ever, acceptable to the Crown. In other words, the Crown requires that you prove that all steps were taken to ensure that the specific incident was prevented.

What’s the choice? You can either plead guilty and accept the joint submission on sentence or run a trial with the cost and risk associated with it.

Practitioners like me have long felt the odds are stacked against the contractor in trying to establish due diligence to the satisfaction of the court. I am pleased to say it can be done.

The key is always to have written policies and procedures that help ensure the OHSA and Regulations are complied with. This is not enough, however.

As found in the recent case R. v. Morin Brothers Building Supplies Inc., (“Morin”) written policies are not sufficient to be successful with a defence of due diligence. They must be implemented with rigour and where people ignore or fail to follow these policies, they must be disciplined. Supervision and diligence is required. I was fortunate to have Morin as a client in this recent case of mine. Morin not only had the written policies in place but went the extra mile in training and updating its employees on these policies. Morin could also demonstrate a consistent pattern of discipline for those who did not follow the policies. Supervisors were present at all times during the period where work was being done.

Where such diligence can be established, as it was in the Morin case, the Court will and did acquit despite an accident that occurred causing a significant injury.

It is important to make use of all the safety tools available to you as a company, including Ministry approved courses and regular ongoing training and refreshers with respect to all potential hazards that your employees may face. Documenting this is essential. If an accident occurs, you will likely be charged and may have the cost and expense of defending yourself in Court and the cost that a penalty brings with it. However, if you establish and maintain a comprehensive due diligence regime, you can avoid a conviction that could give rise to punishing financial penalties. Morin was able to do so and you can too.  If you are convicted however, second and subsequent charges may give rise to even greater financial penalty.

Safety is simply good business as well as being the right thing to ensure at your workplace.

April 27, 2018

The MBC Team was out for the annual Law Day Fun Run & Walk!

 

Law Day 2018

April 12, 2018

We, like the rest of Canada, stand with Humboldt.

IMG 20180412 1039302 min

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