The trustees of the Canadian Commercial Workers Industry Pension Plan say they plan to vigorously defend regulatory charges have been filed against them by the Financial Services Commission of Ontario.

“The charges are regulatory and not criminal, and are being vigorously defended by the trustees,” it says, noting that if they are proven, the charges may result in fines. “The trustees, who cooperated fully with FSCO throughout the examination, deny that they breached their statutory obligations to the Plan members, and state that they have always acted in the best interests of the Plan and its members. No investments were made, or assets sold, without professional advice,” it adds.

“The alleged non-compliance relates to a federal regulation requiring that no more than 10% of a pension plan’s book value assets be invested directly or indirectly in two or more affiliated corporations; and provisions of Ontario’s Pension Benefits Act regarding the supervision by the Board of its investment committee, and due diligence on two private equity investments and certain property loans,” it says.

The primary focus of the FSCO examination was limited-liability companies incorporated by CCWIPP to facilitate direct investment in private equity, real estate, mortgages and other loans, it reports. Assets owned by these companies represent approximately 20% of the $1.4 billion fund. The remaining 80% of the assets are invested in stocks, bonds and other securities managed by external firms. FSCO raised no concerns about these investments, it points out.

The charges followed a three-year examination by FSCO, it reports, adding, “The regulator’s report confirms that there was no evidence to support allegations that trustees benefited personally, received improper payments or committed fraud.”