Investor Protection for Mutual Fund Dealer Bankruptcy
At Educators Financial Group, we want you to invest both wisely and securely. That’s where the MFDA Investor Protection Corporation (IPC) exists to ensure that you are protected if your mutual fund dealer becomes bankrupt. The following outlines what the IPC can do for you. If you require further information, please visit us online at www.mfda.ca or call us at either 416.361.6332, or toll free at 1.888.466.6332.
About the Investor Protection Corporation (IPC)
The IPC is sponsored by the Mutual Fund Dealers’ Association of Canada (MFDA). Its purpose is to ensure, within defined limits, that your assets are protected if a MFDA Member becomes bankrupt. This protection extends to cash, securities, segregated funds and certain other property held in the account of a MFDA Member (with the exception of Quebec).
How you can obtain coverage
IPC coverage is automatic when you become a customer of a MFDA Member. There are no fees to you as the investor.
Where this protection comes from
Each MFDA Member contributes to a fund, and is assessed by the IPC using specific criteria. The principle is that all MFDA Members are to be collectively responsible for the payments of client losses arising as a result of the insolvency of a MFDA Member.
Coverage limit
Each customer account can collect up to $1 million in coverage, to replace loss of securities, cash and other property held by a MFDA Member. Most customers will have two accounts, a general account and a retirement account, that are each eligible for up to $1 million in coverage.
Covered accounts
Each of your accounts will be aggregated as one general account, provided the accounts are held in the same capacity and circumstances.
Some accounts will always remain separate. These include registered retirement plan accounts such as RRSPs, RRIFs, LIRAs, etc., which will be combined into one separate account for coverage purposes.
The general and separate accounts that you hold with one MFDA Member will not be combined with the general and separate accounts that you might hold with another Member.
Please review the information at www.mfda.ca to help you determine which of your accounts will be combined.
Losses not covered
The IPC covers losses arising as a result of the insolvency of a MFDA Member. Losses caused by other reasons such as a change in the market value of mutual fund securities, unsuitable investments, or default of an issuer of a mutual fund, are not covered. Securities, cash, segregated funds or other property that is not held by the MFDA Member, or not recorded in a customer’s account as being held by a MFDA Member (such as mutual fund securities that are registered directly in your name with the mutual fund company) are similarly not eligible for IPC coverage.
At this time, coverage does not extend to customers with accounts held in the province of Quebec.
Each customer claim is considered according to the policies adopted by the IPC. You can view these policies online at www.mfda.ca, or call us at 416.361.6332 or toll-free at 1.888.466.6332, for more information.
Making a claim
Claims by the customer of an insolvent MFDA Member should be made directly to the trustee in bankruptcy or the receiver, if one has been appointed. The IPC may rely on the trustee in bankruptcy under the Bankruptcy and Insolvency Act (Canada) or on the receiver, under applicable law, in determining the amount and eligibility of your claim. You are requested to file a proof of claim promptly (and in any event within 180 days of the date of insolvency) upon receipt of information from the trustee or receiver in order to ensure that this process is completed as quickly as possible.
Recovery of assets
In some cases, your assets will be transferred or sold to another securities firm or MFDA Member. This permits continued access to your accounts and reduces losses.
Guarding against insolvencies
Mutual fund dealer bankruptcy is a rare occurrence. The IPC relies on the adequacy of the MFDA’s prudential regulation. The IPC may carry out reviews of MFDA Members in certain circumstances. Both the IPC and MFDA have experience in identifying certain conditions or activities that may indicate financial difficulties. If a bankruptcy does occur, the IPC is able to protect you.
For additional information, contact the MFDA IPC at:
MFDA Investor Protection Corporation
c/o Mutual Fund Dealers Association of Canada
121 King Street West, Suite 1000
Toronto, Ontario, M5H 3T9
Tel: 416.361.6332
Toll-free: 1.888.466.6332
Fax: 416.943.1218
Email: ipc@mfda.ca
Website: www.mfda.ca
