Assante, Ontario regulator settle in out-of-province case

(November 28, 2003) Assante Financial Management has settled with the Ontario Securities Commission (OSC), over charges the firm had allowed advisors to represent clients in Ontario without proper registration.

Under the settlement, Assante must hire an auditor to review its “policies, procedures and internal controls regarding out-of-province trading” with a report due within 90 days of the auditor being retained and submit the audit results to the OSC’s manager of compliance.

The case stems from Assante’s takeover of another mutual fund dealer which included a representative who was dealing with an Ontario client without proper registration. The firm had notified the OSC prior to the integration with Assante.

Assante had issued an internal directive restricting employees to dealing only in those provinces in which they were registered, imposing a October 29, 2001, deadline for such activity to cease.

The OSC discovered that between January 1, 2000, and August 31, 2001, 152 of Assante’s 800 salespeople were dealing with clients in provinces for which they were not registered.

Assante notified the OSC on May 26, 2003, that it had addressed the out-of-province issue, with the clients being transferred to reps who were properly registered.

The OSC found Assante had violated the Securities Act by not enforcing the provincial registration requirements. Assante admitted to this, but pointed out as mitigating factors that it had resolved the situation by October 2002, and that an OSC review in May 2003 had found no deficiencies.

While the events leading up to this settlement happened over the past few years, this issue points out the value of national regulatory harmonization, which is currently under discussion.

“We haven’t yet defined exactly what our involvement will be with regards to the passport model and other reforms, but we are in full support of all regulatory harmonization and anything we can do to help our advisors help our clients, we’re there,” said Sylvia Kovesfalvi, Assante director of communications in Toronto. “We plan to stay close to these activities and as they roll out we will keep asking ourselves ‘How involved do we get? What needs to be done?'”

Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com