VANCOUVER, BC, July 2, 2024
/CNW/ - A B.C. firm and its former CEO agreed to pay $493,457 as part of a settlement agreement with
the B.C. Securities Commission (BCSC) for failing to comply with
several investor protection requirements, after a BCSC examination
revealed significant deficiencies.
In 2021, BCSC staff conducted a compliance examination of
Fieldhouse Capital Management Inc. (FCMI), which is registered in
B.C. as a portfolio manager, investment fund manager and exempt
market dealer. At the time, Vancouver resident William Douglas
Sereda was the CEO, the chief compliance officer (CCO) and the
ultimate designated person (UDP), the person responsible for the
firm's overall compliance with securities laws.
The compliance examination found significant deficiencies with
the firm, including that it:
- incorrectly classified one investment fund as lower risk than
it actually was
- allowed some clients to be placed into unsuitable
investments
- placed itself in a conflict of interest with certain clients,
and
- failed to maintain sufficient and current "know your client"
information, suitability information, due diligence and research,
conflicts, personal trading and risk management.
FCMI admitted that because of the deficiencies, it failed to
have an adequate and effective compliance system and failed in its
obligations as a portfolio manager with regards to "know your
client" information and suitability determinations. FCMI also
admitted that it failed to identify, address and disclose material
conflicts of interest and did not deal fairly with
clients.
Sereda, who remains with FCMI in various capacities,
acknowledged that he failed to adequately perform his functions as
CCO and UDP, which led to the firm's contraventions.
As part of the settlement agreement, FCMI agreed to pay
$393,457 to the affected clients and
$75,000 to the BCSC. Sereda agreed to
pay $25,000 to the BCSC and agreed
not to seek registration as a CCO or a UDP of any registrant for
five years.
After identifying the deficiencies, the BCSC imposed terms and
conditions on FCMI in 2022 – including the hiring of an
independent compliance monitor for one year at its own expense –
that were aimed at mitigating the ongoing risks to clients and
improving its compliance system. The BCSC removed the terms and
conditions after FCMI corrected the outstanding deficiencies.
In 2023, the BCSC reached a separate settlement
agreement for a former FCMI portfolio manager who agreed to pay
$60,000 to the Commission for
steering his clients into an unsuitable investment.
About the B.C. Securities Commission
(bcsc.bc.ca)
The B.C. Securities Commission, an independent provincial
government agency, strives to make the investment market benefit
the public. We set rules, monitor compliance by industry, take
action against misconduct, and provide guidance to investors and
industry. As guardians of B.C.'s investment market, we're committed
to maintaining a market that is honest, fair, competitive and
dynamic, enabling British Columbians to thrive.
Learn how to protect yourself and become a more informed
investor at www.investright.org
SOURCE British Columbia Securities Commission