At a hearing held Friday, the Ontario Securities Commission approved a settlement agreement reached with TD Waterhouse Canada Inc.

In the settlement agreement, TD Waterhouse admitted that it failed to comply with its suitability obligation to its clients and failed to comply with its obligation to deal with its clients fairly by failing to disclose to its clients a commission paid to TD Waterhouse.

The settlement arose from allegations made by OSC staff that a third party, unaffiliated with TD Waterhouse, engaged in a RRSP/Loan scheme.

TD Waterhouse acknowledged that the financial information contained in new client application forms revealed that their clients were of modest means and that collapsing their locked-in RRSPs or pensions to invest in a long-term, high-risk investment was unsuitable for TD Waterhouse’s clients.

TD Waterhouse agreed to make restitution to its clients, to provide OSC staff with a comfort letter to confirm that it has instituted practices and procedures designed to prevent the facilitation of such action in the future, and to make a settlement payment of $250,000.

TD Waterhouse also agreed to be reprimanded by the Commission and to pay costs of $125,000.

“This settlement agreement reminds registrants of their obligation to ensure the suitability of their clients’ investments and to deal with their clients fairly by disclosing commissions received by them to their clients. The settlement also emphasizes the need to make restitution to clients who have been financially harmed,” said Michael Watson, Director of Enforcement, in a release.