The Ontario Securities Commission (OSC) will hold a hearing on Friday, April 6, to consider a settlement with Toronto-based Mackenzie Financial Corp. concerning the firm’s alleged violations of mutual fund sales practices rules.
The rules set limits on the sorts of inducements that fund managers can provide to mutual fund dealers and dealing representatives (advisors).
According to the OSC’s allegations, Mackenzie violated those rules by:
- engaging in “excessive spending” on promotional activities and items that it provided to advisors;
- hosting conferences, and providing non-monetary benefits to advisors, that did not comply with the limits set out in the rules; and
- financing non-educational dealer events.
The allegations have not been proven and details of any sanctions will only be revealed if the settlement is approved at the hearing.
Securities regulators introduced rules regarding sales practices back in the late 1990’s amid concerns about the conflicts of interest that arose as fund manufacturers competed for distribution.
In the past couple of years, some of those concerns have re-emerged, as regulators have focused on conflicts in the retail investments business, and the harm that these conflicts can inflict on investors — leading them to consider policy action, such as banning embedded compensation structures, and raising industry conduct standards.