Editor’s Note: Wealth Stewards Portfolio Management Inc.(WSPMi) is not affiliated with Toronto-based Wealth Stewards Inc. (WSI) nor WSI’s portfolio management subsidiary Portfolio Stewards Inc.
The Ontario Securities Commission (OSC) has issued an alert advising investors not to enter into investment management agreements with Wealth Stewards Portfolio Management Inc. (WSPMi) or its principals, Sushila Lucas and Bruce Calvin Deck, after it suspended the firm’s registrationi.
The OSC announced Tuesday that the firm’s registration has been suspended indefinitely, and that Lucas’ registration has been suspended too (Deck is not currently registered, it notes). The suspensions follow a hearing that was held after OSC recommended the suspensions based on “the number of significant deficiencies identified during the compliance review of Wealth Stewards (WSPMi)” between August 1, 2012, and July 31, 2013.
Following a hearing, the commission’s director of the compliance and registrant regulation branch, Debra Foubert, ruled that the WSPM’s registration as a portfolio manager should be suspended indefinitely. It also decided that Lucas’ registration as ultimate designated person (UDP) and chief compliance officer (CCO) should also be suspended for three years, and that her advising registration be suspended for six months.
The decision notes that three primary issues were discussed at the hearing: allegations that there was improper delegation of know-your-client (KYC) and suitability obligations, along with advisory activities, to an unregistered person; that the OSC was not notified of a material change in the ownership structure of the firm; and, that there was false certification of client identification documents and inappropriate signatures on firm documents.
“Ultimately, I concluded that terms and conditions were not sufficient in this instance,” the OSC said in its decision. “Wealth Stewards (WSPMi) previously engaged a compliance consultant to establish its compliance system which on paper appeared to have elements of a compliant structure. However, it was the execution of the compliance system that failed in this instance so a term and condition requiring a compliance consultant to enhance the compliance system will not address the failures of the UDP and CCO,” it said.
The suspensions handed down against Lucas were less severe than recommended by OSC staff, the decision notes, because “Lucas did fully cooperate and provided candid responses to staff’s inquiries, there was no evidence presented that the KYC forms were falsified, and no client complaints were brought to my attention during the [hearing].”
In response to the OSC alert, WSPMi issued a statement declaring that it intends to appeal the regulator’s decision. “WSPMi and its principals strongly disagree with the director’s decision and intend to vigorously pursue an appeal,” it says, adding that materials in connection with the appeal and a stay of the director’s decision were filed on June 17.
“WSPMi and its principals have been advised by counsel that it would be inappropriate to provide further comment during the appeal process,” the firm adds.
The OSC will hold a hearing on June 23 to consider an application for a stay of the director’s decision from WSPMi and Lucas, pending a review of that decision by the commission.