BCSC sanctions sales-rule violations

A former fund manager that violated sales practices rules by wooing reps with sports events and concert tickets, among other things, has been sanctioned in a settlement with the British Columbia Securities Commission (BCSC).

The settlement is between the regulator and a now-defunct fund manager, Vertex One Asset Management Inc.; the firm’s former chief compliance officer, Martin David Lang; and its former director and ultimate designated person (UDP), Jeffrey David McCord.

Compliance exams by the BCSC found that Vertex improperly provided more than $100,000 in monetary benefits to reps and another $150,000 in non-monetary benefits — including access to sporting events, concert tickets and gift baskets, and paying co-op marketing expenses.

Handing out these incentives violated the mutual fund sales practices rule, the BCSC alleged.

Additionally, the BCSC said its reviews found “significant deficiencies” in Vertex One’s compliance systems, record-keeping, financial reporting and supervisory systems.

Vertex One, Lang and McCord agreed to collectively pay $300,000 to resolve the case. Additionally, Lang and McCord are prohibited from becoming a chief compliance officer or UDP of any registered firm for four years, and they would be subject to strict supervision for three years.

The BCSC noted that Vertex One’s clients weren’t charged increased fees as a result of the improper incentives. Further, the firm and its former executives fully cooperated with the regulator’s investigation.

Vertex closed up shop in 2021, while Lang and McCord voluntarily surrendered their registrations that same year.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.