Will declaring bankruptcy affect my mutual fund license?

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Declaring bankruptcy in Canada can impact your mutual fund license. Regulatory bodies like the MFDA and IIROC require financial responsibility, so bankruptcy might cause suspension. Don’t worry, though—it’s possible to regain your license if you meet criteria post-bankruptcy.

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Question

Will I lose my mutual fund license if I declare bankruptcy? I want to know if filing for bankruptcy could impact my ability to keep my mutual fund license.

From: Anonymous Question, Ontario (ON)

Debt Insiders Answer

Declaring bankruptcy in Canada might put a bump on the road if you’re planning to keep your mutual fund license. Organizations like the Mutual Fund Dealers Association (MFDA) and the Investment Industry Regulatory Organization of Canada (IIROC) have certain standards in place. They want their members to show good character and financial responsibility. When you declare bankruptcy, it could be seen as dropping the ball on the financial responsibility part, which could lead to your mutual fund license being suspended or even taken away. But don’t fret too much—getting your license back after bankruptcy can be possible. It all hinges on your post-bankruptcy circumstances and meeting the good standing criteria set by the regulatory body once your bankruptcy is discharged.

From: Insider Scott

Office of the Superintendent of Bankrupty (OSB) Answer

Declaring bankruptcy can indeed impact your ability to retain your mutual fund license in Canada. According to the regulations governing mutual fund licensing, specifically under the Mutual Fund Dealers Association of Canada (MFDA) and the Investment Industry Regulatory Organization of Canada (IIROC), you may be subject to restrictions if you are an undischarged bankrupt.

Refer to the following documents:

• The Bankruptcy and Insolvency Act (RSC 1985, c B-3), especially sections concerning disqualified individuals.
• The Mutual Fund Dealers Association of Canada’s rules and the Investment Industry Regulatory Organization of Canada rules, which generally mandate that a licensee must be of good character and financial integrity.

Filing for bankruptcy could lead to the loss of your license while you remain undischarged. It would be prudent to consult the specific regulations from the relevant regulatory body governing your mutual fund license for precise details.

From: This answer is provided by scanning the OSB Bankruptcy & Insolvency Act and related directives

Related Questions

Here are the top 5 most frequently asked questions related to the impact of bankruptcy on a mutual fund license in Canada, presented in a clear and numbered format:

1. Will I lose my mutual fund license if I declare bankruptcy?

• You may lose your license, as the criteria vary by province and require disclosure to your compliance team and the MFDA.

2. How does bankruptcy affect my career as a financial advisor?

• Bankruptcy may lead to disciplinary action, including the potential loss of your license, depending on provincial regulations.

3. Do I need to disclose my bankruptcy to the MFDA?

• Yes, you must disclose your bankruptcy to the MFDA and your compliance team.

4. Can I continue to work in the financial industry after bankruptcy?

• It depends on the specific regulations in your province and the policies of your employer and regulatory bodies.

5. Are there any specific steps I need to take if I am a mutual fund licensee and considering bankruptcy?

• You need to contact your local authority to understand the implications and disclose the bankruptcy to your compliance team and the MFDA.

References

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