Three executives at a former portfolio manager and exempt market dealer have been sanctioned in a settlement with the British Columbia Securities Commission (BCSC), which found that one of the firm’s funds failed to properly value a significant illiquid asset.
Under a settlement agreement, Chartwell Asset Management Inc. was permanently banned and three of its executives — president, CEO and director Gregory Cameron, vice-president and chief compliance officer Matthew Cameron, and director Wah Bo Chew — agreed to financial sanctions and industry suspensions.
The sanctions follow admissions that the firm violated its regulatory obligations when one of its funds — which had loaned a large portion of its assets to a company — didn’t properly value the asset, and didn’t adequately respond to the deterioration of the asset when the company stopped making interest payments.
Ultimately, the company defaulted on the loan.
“By calculating the net asset value of the Income Fund without having sufficient information to do so and by failing to re-evaluate the Income Fund’s valuation despite the presence of risk indicators, Chartwell failed in its duty as an investment fund manager to exercise the degree of care, diligence and skill that a reasonably prudent person would exercise in the circumstances,” the settlement said.
Under the settlement, Gregory Cameron is banned from being a registrant and acting as a director/officer of an issuer for 15 years and must pay $100,000. Chew is prohibited from acting as a director/officer for 10 years and has to pay $70,000, and Matthew Cameron is banned from working as a chief compliance officer for four years and must pay $40,000.
The firm gave up its registration in 2020.
The settlement noted that Chartwell and the Camerons had no previous disciplinary history and that agreeing to the settlement represented “a significant mitigating factor” enabling the regulator to avoid a “potentially lengthy hearing to determine liability.”