An Ontario Securities Commission panel today approved settlements that will result in $156.5 million being distributed to investors harmed by market timing activities in mutual funds managed by four companies.

The settlements were reached earlier this week by OSC Staff with CI Mutual Funds Inc., AGF Funds Inc., I.G. Investment Management, Ltd. and AIC Ltd.

CI agreed that, as a term of settlement, to pay $49.3 million to be distributed to affected investors.

AGF to pay $29.2 million; I.G. Investment Management, Ltd. agreed to $19.2 million; AIC Ltd. agreed to pay $58.8 million.

The agreements said that the conduct of the four fund managers — in failing to protect fully the best interests of the relevant funds — was contrary to the public interest. As well, the fund managers had entered into agreements with institutional investors who profited by the frequent trading market timing activities.

“Every penny of the $156.5 million will go to the people who were negatively affected by the frequent trading market timing,” said Michael Watson, OSC Director of Enforcement, in a release. “The fund managers will pay for the distribution of the funds to unit holders under the supervision of an independent consultant, under a plan that will need to be approved by the Chair and a Vice-Chair of the OSC. As well, the fund managers will ensure that the investors who were responsible for the frequent trading market timing do not receive any of these funds.”

“While the behaviour of the investors who profited by the frequent trading market timing was not in violation of Ontario securities law, the mutual fund managers did not implement appropriate measures to fully protect the funds against the harm caused by the market timing trading. We expect fund managers will monitor trading vigilantly to ensure these practices, and any other abusive trading harmful to investors, do not reoccur,” added Watson.

Meanwhile, OSC Chair David Brown announced that the probe into trading activities in mutual funds is now complete. The OSC said it is not contemplating any further regulatory proceedings on this matter.

“We have concluded our investigations into possible late trading and market timing activities in mutual funds authorized for sale in Ontario,” said Brown.

The OSC also confirmed that it had issued a letter last week to a final mutual fund manager, Franklin Templeton Investments, to say that it was contemplating enforcement proceedings related to possible market timing.

The OCS reiterated that no evidence of ongoing market timing activity has been found since the review of the Canadian mutual fund industry began in November 2003. As well, OSC staff did not uncover any evidence of late trading.

A hearing into trading practices at I.G. Investment Management, Ltd. was held concurrently with the OSC hearing by the Manitoba Securities Commission. As well, the Investment Dealers Association and the Mutual Fund Dealers Association of Canada held related hearings today.