Scotia expedites ‘no contest’ settlement

Scotia Capital Inc., Scotia Securities Inc. and Holliswealth Advisory Services Inc. will ask an Ontario Securities Commission panel on Friday to approve a “nocontest” settlement that resolves a case in which the bank allegedly overcharged mutual fund investors.

In February 2015, the bank and its network of retail investment dealers contacted the OSC to report that it had found errors in its compliance system that resulted in clients paying excessive fees.

During a subsequent investigation, the OSC found the overcharge was unintentional, according to a statement of allegations released Tuesday.

“Commission Staff do not allege, and have found no evidence of dishonest conduct by the Scotia Dealers,” the statement says. “The Scotia Dealers are taking corrective action, including implementing additional controls, supervisory and monitoring systems, to prevent the re-occurrence of the Control and Supervision Inadequacies in the future.”

No-contest settlements are a procedure the OSC adopted in 2014 in which respondents are not required to make formal admissions of misconduct. The process is designed to speed up proceedings and recover funds for harmed investors more quickly.

According to the OSC allegations, some Scotia clients paid excessive management fees on various mutual funds between Jan. 1, 2009 to Dec. 31, 2015. Some of the funds were supposed to charge lower management fees to clients who met a minimum investment threshold, but this didn’t happen.

The OSC alleges the Scotia dealers failed to establish, maintain and apply procedures to establish controls and supervision over the accounts in breach of both the public interest and a nation- wide policy followed by Canada’s provincial securities regulators, National Instrument 31-103–Registration Requirements, Exemptions and Ongoing Registrant Obligations.

NO EVIDENCE OF DISHONEST CONDUCT BY THE SCOTIA DEALERS.