The British Columbia Securities Commission (BCSC) reports that it has found an increased number of deficiencies in compliance among portfolio managers during 2018. The BCSC published these findings in its 2018 BCSC Annual Compliance Report Card (the Report Card).
In 2018, the BCSC conducted 23 compliance reviews and found 151 deficiencies, averaging 6.57 deficiencies per review. Although that number was down slightly from 2017 with 6.58 deficiencies per review, it is an increase from 4.29 in 2016, and 4.64 in 2015.
Among the most common types of deficiencies were questionable risk management, outdated manuals, and weak cybersecurity policies and procedures. Other common problems included inadequate disclosure, especially about the registrant-client relationship, and patchy efforts to ensure the suitability of investments for each client.
As a result of these ongoing reviews, the BCSC imposed extra restrictions on two firms, one of which decided to surrender its registration as a result. Two other firms chose to give up their registrations while still being reviewed. The BCSC is increasingly referring the most egregious cases of non-compliance to its enforcement team for further investigation and possible penalties, including suspension or bans from the capital markets, as well as fines. In 2018, the BCSC opened investigations into four cases that began as compliance reviews.
The 2018 BCSC Annual Compliance Report Card is available for download from the website of BCSC.
For more information, please call Barbara Hendrickson at BAX Securities Law (416) 601 -1004.
This publication is not intended to constitute legal advice. No one should act on it or refrain from acting on it without consulting with a lawyer. BAX does not warrant or guarantee the accuracy or currency or completeness of the publication. No part of this publication may be reproduced without the prior written permission of BAX Securities Law.
