🔥 Daily ChallengeCIREConflicts of interest and ethicsMedium
A Mutual Fund Dealer experiences a technical failure in its account opening system, which was maintained by an external IT service provider. Several new accounts were opened without proper KYC documentation. Who is responsible for this regulatory breach under Rule 1.1.3?
2 attempts · 100% correct
The external IT service provider, as the failure was technical and outside the Dealer's expertise.
The individual Approved Persons who used the system, as they should have manually verified the KYC data.
The provincial securities commission, for failing to audit the IT service provider's software.
The Mutual Fund Dealer, because it remains responsible for compliance with all Rules despite the service arrangement.Correct
Why
Correct. Rule 1.1.3(c) provides that the Member (Dealer) remains responsible for compliance with the Rules regardless of any service arrangement.
