In January, we published an FAQ discussing the risks that advising representatives face if they accept an appointment as an executor of a client’s estate. We noted that securities regulators have concerns about the potential conflicts of interest arising in such arrangements. These kinds of concerns are reflected in the recent announcement by the Ontario Securities Commission (OSC) that it is taking enforcement action against a mutual fund dealing representative (M) who agreed to act as his elderly and terminally ill client’s attorney for personal care and property and as executor of her estate, even though he is alleged to have known that he was also a beneficiary under her will.

According to the statement of allegations, M did not comply with his employer’s specific prohibition on accepting powers of attorney from clients such as the client in this case or its requirement to disclose to the firm any actual or potential conflict of interest. The OSC is alleging, among other things, that M failed to deal honestly, fairly and in good faith with the client contrary to subsection 2.1(2) of OSC Rule 31-505 Conditions of Registration and that his conduct was contrary to the rules of the Mutual Fund Dealers Association (MFDA), his employer’s policies and procedures, and the public interest.

AUM Law can assess and, if necessary, help you enhance your firm’s policies, procedures and practices regarding potential conflicts of interest like this. We can also conduct training with your employees to sensitize them to the legal, regulatory and reputational risks associated with accepting such appointments. Please do not hesitate to contact us.