The Mutual Fund Dealers Association of Canada (MFDA) acted improperly in soliciting proxies from its members for a special general meeting of its membership in October 2009, a British Columbia Securities Commission (BCSC) panel has found.
The panel’s findings, released Wednesday morning, asserted the MFDA directors failed to consider the difference between a self-regulatory organization soliciting proxies from its members and a company carrying out the same actions with its shareholders.
“We find that the MFDA board’s decision to conduct the proxy solicitation process as it did for the October 2009 special meeting would have led an objective observer to question the integrity and credibility of the MFDA in managing that process,” the panel said, according to BCSC’s news release.
In its decision, the BCSC panel directed the MFDA to use a third-party proxy solicitation firm instead of its own directors, officers and employees, and to keep member votes confidential from MFDA officials. The panel also directed the MFDA not to implement the amendments passed at the October 2009 meeting until its members vote on those amendments at a meeting conducted in accordance with BCSC’s directions.
“We are in the process of reviewing the BCSC decision with counsel and I have no further at comment at this time,” MFDA of Canada president and CEO Larry Waite wrote in e-mail to Business in Vancouver.
The MFDA of Canada is a national self-regulatory organization for the distribution side of the Canadian mutual fund industry. It is structured as a not-for-profit corporation and its members are mutual fund dealers licensed with provincial securities commissions.
Calls to the BCSC were not returned by press time.