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Which regulators protect you if your investment dealer goes broke
Related: I’m moving investments to an online broker. Will they cover my fees?Note that mutual fund dealers are not regulated by IIROC and are therefore not covered by the CIPF. However, the Mutual Fund Dealers Association (MFDA) provides similar coverage (except in Quebec) through the MFDA Investor Protection Corporation. The insolvency of a brokerage or dealer isn’t common, but it happens. The most high-profile in recent years was MF Global Canada in 2011. More recently, Octagon Capital needed over $6.1 million in CIPF funds to compensate its clients in 2015.
Related: Should couples hold duplicate investments?While you can feel confident that you’re protected in the event of your brokerage’s insolvency, you should understand what the CIPF does not cover. You’re not protected if your stocks or funds lose money, even if you feel your advisor recommended investments that were inappropriate. Nor does the CIPF guard against fraud or misconduct by an advisor. In these cases, your recourse is to make a complaint to the body that regulates your advisor: generally IIROC or the MFDA. (In Quebec, clients are covered by the Autorité des marchés financiers.) MORE ABOUT ASK AN INVESTMENT EXPERT:
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This article appears to be wrong – the list of members in the the Canadian Investor Protection Fund (CIPF) link does not include Q-trade for instance, so are you sure it is automatic?
Qtrade is actually on the list under a different name – false alarm!