June 7, 2023

The Queens County Citizen

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One million fine for Deszardins affiliate

One million fine for Deszardins affiliate

Autorit des March Financiers said on Tuesday that it had fined the Dzjardines Financial Services Firm (DCSF) $ 1 million for implementing an incentive compensation system that favors the sale of Dzzardins funds rather than external funds. (AMF).

The announcement comes after the Financial Markets Administrative Tribunal on Monday approved the agreement between AMF and DCSF. The Deszardins Group subsidiary, which said the compensation structure was completed in late 2016, accepted the allegations during the investigation and did not compete on the fine.

According to the AMF, the remuneration structure was in place from 2009 to 2016 and was “mandatory only in 2016 because delegates were not required to join in previous years”. The financial sector police have indicated that this type of plan violates two articles of Regulation 81.05 on the business practices of collective investment firms.

In addition, the DCSF “optional application of the incentive compensation plan (2009 to 2015) failed to keep legally required compensation records for bonuses paid under the plan”, ‘AMF.

Organizational methods

In the fall of 2016, AMF, along with other Canadian executives, took a closer look at the companies’ pay practices. According to its spokesperson Sylvain Theberz, the goal is to “gain a better understanding of the methods of remuneration of brokers.” The latter indicated that “this file does not emerge from any customer complaint and the investigation did not disclose the circumstances under which the customer may have suffered losses as a result of the violations examined.”

In addition, Mr Theberg said similar decisions had been made in 2018 regarding Sun Life and Royal Mutual Funds.

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“We have observed the conclusions of the AMF report and we have not contested the administrative fine imposed on us. That is why there is an agreement between AMF and Desjardines regarding this situation. Of employees, primarily, financial plans. ”These employees receive salary and do not receive commissions. This is a tool that really allows them to calculate their annual bonus. “

Regulatory requirements

“At Desjardines, for some employees, there is a small category called incentive compensation, which has since been in line with the requirements of various regulators and depends on the goals and achievements for certain advisers,” Mr Turcotti said, adding that “incentive compensation is not unique to Desjardines”.

“It helps to reward employees who have reached or exceed their goals. This is the counting element of the incentive plan, which is fine, but in this employee incentive plan, there are many other factors as well, such as customer satisfaction.”

At the end of 2016, “Therefore for the year 2017, we have modified our incentive compensation practices to suit the needs, on a voluntary basis, following comments from AMF”.

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