Compliance Memo

COMPLIANCE MEMO 2010-02; MFDA MR-0074, Leverage Risk Disclosure

For more information, contact:

Compliance Team

Date Issued:

October 25, 2010

On April 6, 2010 the MFDA issued a notice MR-0074 which replaces MR Notice MR-0006 “Borrowing Money to Buy Securities (Leveraging)”, issued on March 16, 2001. As a result, GP Wealth Management and its Financial Advisors are required to provide the revised leverage disclosure to clients as of July 1, 2010. The revised “Leverage Disclosure Document GPLDD_(05/2010)” can be download from your advisor website.

In addition, some additional guidance has been provided as part of GPWM’s leverage policies and procedures.

When disclosure must be provided

Under MFDA rule 2.6 (Borrowing for Securities Purchases), a leverage risk disclosure document containing information prescribed by the MFDA must be provided to all clients: (i) when a new account is opened; and (ii) when an Advisor makes a recommendation for purchasing securities by borrowing or otherwise becomes aware of a client borrowing monies for the purpose of investment.

When disclosure is provided

  • Leverage Disclosure is embedded in the GPWM NAAF that each client receives when a new account is opened.
  • A separate stand-alone Leverage Disclosure document is sent to each new client in the GPWM New Client Welcome Package.
  • A separate stand-alone Leverage Disclosure document (GPLDD 05.2010) must be signed by the client when opening a leverage plan. The client must receive a signed copy of the document.

On a go forward basis, please be sure to use the new Leverage Disclosure Document GPLDD 05.2010.

As always, if you have any questions or comments, contact the Compliance Department by email at