CI Investments Inc. has entered a no-contest settlement using the Ontario Securities Commission that will see the fund management firm return $156.A million to “harmed investors” after self-reporting errors in calculating fund unit values.
The regulator said Wednesday it is the largest quantity of investor compensation up to now in a no-contest settlement — a kind of settlement recently adopted by the OSC that does not require an admission of wrongdoing.
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This settlement followed allegations by OSC staff that CI’s system of controls and supervision, and it is monitoring and oversight of the outsourced company, weren’t sufficient to deal with a distinctive cash collateral feature of certain funds, and also to make sure that interest earned in related accounts was recorded and contained in the net asset value (NAV).
Staff alleged these inadequacies resulted in the NAV being understated and that this error wasn’t promptly identified and corrected.
“Staff do not allege, and have found no proof of, dishonest conduct” by CI, the regulator said inside a statement Wednesday.
In addition to returning funds to harmed investors, CI designed a payment of $8 million towards the OSC to succeed the regulator’s mandate of protecting investors. The fund management firm designed a further payment of $50,000 towards the costs of the investigation.?
CI is promoting and is implementing enhanced control and supervision procedures, and, under the terms of the settlement agreement, is needed to report ongoing progress towards the OSC.
