The Ontario Securities Commission will hold hearings next week to consider settlements with HSBC Bank Canada, CIBC and CIBC World Markets for their sales of third-party asset-back commercial paper (ABCP), the regulator said Friday.

Separately, Investment Industry Regulatory Organization of Canada said it would hold hearings to review settlements with Canaccord Financial Ltd., Credential Securities Inc., and Scotia Capital Inc. over similar allegations.

The OSC hearings are scheduled for Dec. 21 in Toronto.

Staff of the OSC allege that between July 25 and August 3, 2007, HSBC Bank Canada, CIBC and CIBC World Markets Inc. “engaged in conduct contrary to the public interest by failing to adequately respond to emerging issues in the third-party ABCP market insofar as they continued to sell third-party ABCP without engaging compliance and other appropriate processes for the assessment of such emerging issues.”

IIROC hearings

The IIROC hearings for Canaccord and Credential will be held Monday in Vancouver. Scotia Capital’s hearing takes place Monday in Toronto.

The subject matter of the proposed settlement agreements with Canaccord and Credential concerns allegations that:

During 2006 and 2007, the firms “did not take steps to adequately ensure its sales staff understood the complexities of the third-party ABCP product it offered for sale to retail clients and the consequent risks (including systemic risks and counterparty risks) related to the product and, in not taking these adequate steps, did not ensure that the purchase of third-party ABCP was appropriately understood by its clients.”

The subject matter of the proposed settlement with Scotia Capital concerns allegations that:

“Between July 25 and August 10, 2007, the respondent failed to adequately respond to emerging issues in the Coventree ABCP market insofar as it continued to sell Coventree ABCP without engaging compliance and other appropriate processes for the assessment of such emerging issues.”

IE