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OSC and AMF Investigation Into Delayed Delivery of Disclosure Documents to ETF Investors Leads to $1.5M in Penalties

In two recent decisions, the Ontario Securities Commission and Quebec's Financial Markets Administrative Tribunal both approved settlements reached by a Canadian Bank with, respectively,  the OSC and the AMF (OSC Settlement and AMF Settlement). The charges against the Bank related to a failure by its corporate predecessors to provide timely delivery of summary disclosure documents to investors who purchased exchange traded fund (ETF) securities. In doing so, the Bank failed to act in accordance with applicable exemptive relief decisions. The cause of this failure was due to a programming error by one of its technology suppliers. The problem continued over a period of 19 months and affected more than 200,000 transactions carried out in Quebec and Ontario with a total value of $5 billion. Both authorities acknowledged that the Bank fully cooperated with them, that the error was not a result of bad faith, and that no financial losses were suffered by any customers as a result of the problem.

After discovering its mistake, the Bank issued all necessary documents to the investors involved and resolved its technological problem. However, even if no financial losses resulted from this violation, Quebec's Tribunal still decided to impose a fine of 800 000$ (AMF Decision), and Ontario's Commission imposed a 700 000$ fine (OSC Decision), both as dissuasive measures. Both authorities also received an additional $35,000 in costs. Both authorities re-affirmed with these penalties that the information systems in place in Quebec and Ontario are of the utmost importance in order for investors to make well-informed decisions when making transactions.

  • Par : Daniel Grodinsky