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News Release

Lack of supervision costs mutual fund dealer $25,000

  • Date:

    2001-03-22

  • Number:

    2001/10

Released: 03/22/01 Contact: Dean Pelkey
NR 01-10 (604) 899-6880 or
(BC only) 1-800-373-6393

Vancouver -- Ontario-based mutual fund dealer W.H. Stuart Mutuals Ltd. has agreed to pay the British Columbia Securities Commission a $25,000 administrative penalty including investigative costs for its failure to supervise the activities of its sales staff or keep proper records.

As part of the settlement, W.H. Stuart also agrees to appoint an independent auditor to review compliance procedures at each of its B.C. offices.

W.H. Stuart has been a registered mutual fund dealer in B.C. since 1986.

The problems at W. H. Stuart came to light during a BCSC audit of the company's activities between 1995 and 1999.

Key findings of the audit included:

  • Failure to maintain complete and accurate records of its business transactions;
  • Failure to establish and apply written business procedures for dealing with clients;
  • Failure to approve opening of new client accounts;
  • Failure to supervise transactions made for clients.
A random review of W.H. Stuart client files appeared to show that in some instances company salespeople failed to ask clients about their investment needs or objectives or examine the suitability of investments recommended to clients.

Last year the Alberta Securities Commission fined W. H. Stuart $150,000 for the sale of limited partnerships in Montebello Egyptian Bloodstock to Alberta nine investors without a registration or a prospectus.

The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities and exchange contracts within B.C. Copies of the agreement can be viewed in the documents database of the commission’s website www.bcsc.bc.ca or by contacting media relations officer Dean Pelkey at 899-6880.