On July 29, 2016, the Ontario Securities Commission approved its
fifth no-contest settlement. Three bank dealers, Scotia Capital
Inc., Scotia Securities Inc. and Holliswealth Advisory Services Inc
(collectively, the "Scotia Dealers") agreed to pay $20
million in compensation to harmed clients and to make voluntary
payments of $800,000 to the OSC to advance the OSC's mandate of
investor protection and $50,000 in respect of costs incurred by OSC
Staff. This no-contest settlement followed the Scotia Dealers
self-reporting of certain inadequacies in their internal control
systems which resulted in clients who held certain fund units and
structured products paying excess fees over a six year time period.
This settlement provides confirmation of the benefits of
self-detection and self-reporting of issues and the OSC's
continued commitment to early resolution of certain matters without
requiring admissions of liability.
In approving the settlement agreement, the OSC noted certain
mitigating factors including: the Scotia Dealers provided prompt,
detailed and candid cooperation to the Commission Staff, no
evidence of dishonest conduct by the Scotia Dealers and the
internally formulated intention to pay appropriate compensation to
their clients when they self-reported the inadequacies. The Scotia
Dealers had also undertaken a review and correction of their
compliance system to ensure that the errors did not recur. In its
order, the OSC also approved certain go-forward reporting
requirements designed to ensure that the revised compliance
procedures worked appropriately and to address any issues that may
arise down the road.
The OSC's approval of five no-contest settlements over the
past two years confirms the regulator's commitment to cautious
use of this enforcement tool and dispels the floodgates concerns
raised by detractors. "No-contest" settlements were
introduced in 2014 through OSC Staff Notice 15-702: Revised Credit
For Cooperation Program in an effort to achieve more timely and
efficient resolution of enforcement matters. Such settlements do
not require respondents to admit facts alleged by enforcement
staff, a contravention of the Securities Act (Ontario) or
that the alleged conduct is contrary to the public interest. The
OSC's approach in this case demonstrates a firm recognition
that no-contest settlements are an effective tool which offer the
flexibility needed to achieve finality in settlement
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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