The Ontario Securities Commission (OSC) will hold a hearing on June 7 to consider a proposed no-contest settlement agreement with IPC Securities Corp. (IPCSC) and IPC Investment Corp. (IPCIC) in connection with alleged client overcharging, the regulator announced on Tuesday.
The details of the settlement will only be revealed if the agreement is approved at the hearing.
IPCSC is a member of the Investment Industry Regulatory Organization of Canada and is registered as an investment dealer. IPCIC is a member of the Mutual Fund Dealers Association of Canada and is registered as a mutual fund dealer and an expemt market dealer.
According to the statement of allegations, the dealers self-reported weaknesses in their controls and supervision to their respective self-regulatory organizations in 2015.
These inadequacies “resulted in certain clients of the IPC dealers paying, directly or indirectly, excess fees that were not detected or corrected by the IPC dealers in a timely manner,” it states.
“Commission staff do not allege, and have found no evidence of dishonest conduct by any of the IPC dealers,” it adds.
The alleged overcharging concerns clients in fee-based accounts, which held assets that also included embedded trailer fees and clients that qualified for a lower management expense ratio (MER) series of certain proprietary funds, but paid excess fees by being invested in the higher MER series of the same funds.
The OSC has resolved a number of similar cases of overcharging with a variety of dealers under its no-contest rules, which allows firms to settle allegations without admitting any wrongdoing, provided they meet certain conditions — typically including self-reporting, the firm paying client restitution, and other voluntary corrective action.