A bulk transfer of accounts consists of transferring a group of accounts held by a registered firm to another without first obtaining the written consent of each client. Under Section 14.11 of Regulation 31-103 respecting Registration Requirements, Exemptions and Ongoing Registrant Obligations, bulk transfers by registered firms may take place under limited circumstances.
For example, a bulk transfer may take place :
- where a registered firm stops carrying on business and sells all its client accounts to another registered firm,
- where a registered firm sells a branch to another registered firm and the transaction includes the client accounts of that branch.
Where a representative leaves a registered firm to join another, he cannot use the procedure set out under section 14.11 to carry out a bulk transfer to the new firm of all client accounts assigned to him at his former firm.
When the mutual fund sector was governed by An Act respecting the distribution of financial products and services This link will open in a new window (“Distribution Act”), a bulk transfer procedure was provided in the event a representative left a mutual fund dealer to join another. That procedure was authorized through a directive issued by the Bureau des services financiers on December 5, 2001 entitled “Disciplines en valeurs mobilières - Procédure de transfert en bloc des dossiers clients entre cabinets” [Securities – Procedure for the bulk transfer of client files between firms]. When the securities sector (mutual funds and scholarship plans) was moved from the Distribution Act to the Securities ActThis link will open in a new window on September 28, 2009, the directive regarding bulk transfers was withdrawn.
It is important to understand that the opening of a securities account is a contract between the client and the brokerage firm, and the firm cannot end the contractual relationship without the client's consent. Only the client can decide what will happen to an account opened with a brokerage firm. Under normal circumstances, all account transfers require the client's prior written consent.