Settlements
W.H. STUART MUTUALS LTD. [Sec. 161 & Settlement Agrmnt.]
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BCSECCOM #:
2001 BCSECCOM 346, 2001 BCSECCOM 347
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Document Type:
Sec. 161 & Settlement Agrmnt.
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Published Date:
2001-03-22
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Effective Date:
2001-03-20
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Details:
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2001 BCSECCOM 346
R.S.B.C. 1996, c. 418
AND
IN THE MATTER OF W.H. STUART MUTUALS LTD.
Order Under Section 161
[para 1]
1. WHEREAS a Settlement Agreement was executed by W.H. Stuart Mutuals Ltd. (“WHS”) and the Executive Director, a copy of which is attached hereto as Schedule "A" (the "Agreement");
[para 2]
2. NOW THEREFORE the Executive Director, considering that it would be in the public interest to do so, orders, BY CONSENT, under section 161(1)(f) of the Securities Act, R.S.B.C. 1996, c. 418 (the “Act”) that, as a condition of its registration:
2.1 The exemptions described in sections 45, 46(j), 47, 74, 75(a) as far as it
refers to a security described in section 46(j), 75(b), 98 and 99 of the Act do not apply to WHS.
2.2 WHS shall submit to a review of its compliance practices and procedures, including an on-site review of each branch and home-based office in the province of British Columbia, to verify compliance with the Act and the Securities Rules, B.C. Reg. 194/97by WHS and its representatives at those offices, such review to be carried out by an expert appointed by the (the "Commission") upon the joint submission of WHS and staff at the British Columbia Securities Commission, at WHS's expense. WHS shall ensure that the findings and conclusions of the review are reported to the Capital Markets Regulation Division of the Commission not later than April 30, 2001.
DATED at Vancouver, British Columbia, on March 20, 2001.
Executive Director
2001 BCSECCOM 347
IN THE MATTER OF THE SECURITIES ACT
R.S.B.C. 1996, c. 418
AND
IN THE MATTER OF W.H. STUART MUTUALS LTD
Settlement Agreement
[para 1]
The following settlement of issues has been reached between W.H. Stuart Mutuals Ltd. (“WHS” and the Executive Director.
Agreed Statement of Facts
[para 2]
As a basis for the undertakings and orders referred in paragraphs 4 and 5 of this settlement agreement, WHS acknowledges the following facts as correct:
2.1 WHS was incorporated under the laws of Ontario on April 1, 1986 and was extra-provincially registered in British Columbia on November 7, 1986. WHS's head office within British Columbia is located at Suite 200, 4170 Still Creek Drive, Burnaby, B.C.
2.2 WHS has been a registered mutual fund dealer in British Columbia since November 19, 1986, pursuant to section 34 of the Securities Act, R.S.B.C. 1996, c. 418 (the “Act”.
2.3 From August 1, 1995 until March 18, 1999 (the “Relevant Period”, WHS failed to keep at its chief place of business in British Columbia a complete and accurate record of its business transactions and financial affairs that were conducted in British Columbia, in contravention of section 27 of the Securities Rules, B.C. Reg. 194/97 (the “Rules”.
2.4 During the Relevant Period, WHS failed to maintain a sufficiently detailed manual of the supervisory duties of the British Columbia trading officer, which amounted to a failure to establish and apply written prudent business procedures for dealing with clients, in contravention of section 44(1 of the Rules.
2.5 During the Relevant Period, WHS designated a compliance officer and branch managers to approve the opening of new client accounts and to supervise transactions made on behalf of clients in British Columbia. However, the compliance officer and branch managers failed to properly approve the opening of new client accounts and to supervise transactions made for some clients. WHS failed to properly supervise the compliance officer and branch managers to ensure that they adequately performed their duties and followed company procedures, and, as a result, WHS contravened section 47 of the Rules.
2.6 Based on a sampling of WHS client files reviewed by staff ("Staff" of the British Columbia Securities Commission (the "Commission", it appears in some instances that WHS registered representatives failed to make inquiries of their clients regarding the general investment needs and objectives of the clients, the appropriateness of recommendations made to the clients, and the suitability of proposed purchases or sales for the clients, in contravention of section 48 of the Rules.
2.7 On August 23, 2000, the Alberta Securities Commission (the "ASC", after a hearing:
2.7.1 found that WHS was responsible for distributing units in the Montebello Egyptian Bloodstock Limited Partnership to nine investors in Alberta without registration and a prospectus, in violation of sections 54(1 and 81(1 of the Alberta Securities Act S.A. 1981, c. S-61 in 1993 and 1994; and
2.7.2 ordered WHS to pay an administrative penalty in the amount of $150,000 to the ASC.
Mitigating Factors
[para 3]
The Executive Director has taken into account the following facts and representations as factors mitigating the sanctions which would otherwise have applied in the public interest:
3.1 WHS was at all material times fully cooperative with Staff.
3.2 WHS represents that it rectified all the deficiencies that were identified by Staff in the Compliance Examination Report that was sent to WHS on April 7, 1999.
3.3 WHS represents that at all times supervision of trades was being conducted at its head office in Ontario, but WHS recognizes that supervision is required in British Columbia and has, in the meantime, implemented the procedures to ensure compliance with the Act and Rules.
Undertaking
[para 4]
WHS undertakes to pay to the Commission, at the signing of this Agreement, the sum of $25,000, of which $5,000 represents the costs to the Commission of the investigation.
Order
[para 5]
WHS consents to an order by the Executive Director (the “Order”, under section 161(1(f of the Act, that, as a condition of its registration:
5.1 The exemptions described in sections 45, 46(j, 47, 74, 75(a as far as it refers to a security described in section 46(j, 75(b, 98 and 99 do not apply to WHS.
5.2 WHS shall submit to a review of its compliance practices and procedures, including an on-site review of each branch and home-based office in the province of British Columbia, to verify compliance with the Act and the Rules by WHS and its representatives at those offices, such review to be carried out by an expert appointed by the Commission upon the joint submission of WHS and Staff, at WHS's expense. WHS shall ensure that the findings and conclusions of the review are reported to the Capital Markets Regulation Division of the Commission not later than April 30, 2001.
Waiver
[para 6]
WHS waives any right it may have, under the Act or otherwise, to a hearing, hearing and review, judicial review or appeal relating to, in connection with or incidental to this agreement.
DATED at Toronto, Ontario, on March 5 ,2001.
W.H. STUART MUTUALS LTD.
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Authorized Signatory
________________________________
Name (please print
Capacity
________________________________
Witness Signature
Witness Name (Please print
Address
________________________________
Occupation
DATED at Vancouver, British Columbia, on March 20,2001.
Steve Wilson
Executive Director