Firm agrees to five-figure settlement over compliance failings

Portfolio manager failed to provide assurances it complied with securities legislation

Firm agrees to five-figure settlement over compliance failings

A British Columbia Securities Commission (BCSC) investigation has revealed that a Kelowna portfolio manager had inadequate compliance systems, record-keeping, and financial reporting.

After agreeing to a settlement agreement with the BCSC, Kilburn Ogilvie Waymann Investment Management Ltd. (KOWIM) has paid $55,700 to the Commission for “not managing business-associated risks and not providing reasonable assurance that it complied with securities legislation”.

During a compliance field examination in 2019, BCSC staff found that the firm:

  • did not maintain records capable of generating certain account activity reports
  • made unsubstantiated marketing claims on its website about the benefits of investing through a portfolio manager
  • failed to ensure it was registered in each province where it had clients
  • paid client management fees it earned to an unregistered holding company
  • inaccurately calculated its excess working capital, and
  • delivered deficient audited financial statements and a deficient auditor’s opinion to the BCSC as part of its required filings.

The BCSC investigation also found that the firm’s chief compliance officer failed to adequately perform his responsibilities.

KOWIM, which is also registered as a portfolio manager in Ontario, Manitoba and Alberta, admitted to the misconduct. The deficiencies have since been corrected and there is no evidence that any clients were harmed.

This is the second time the BCSC has found deficiencies at the firm. In 2012, the firm admitted that it failed to establish and maintain an adequate compliance system, and failed to maintain a minimum level of regulatory capital.