BC Securities Commission hands down penalty over KYC failures, inadequate reporting, and other violations
A Vancouver-based portfolio manager has been penalized by the BC Securities Commission (BCSC), which found it had once again fallen short of its compliance obligations after a 2020 compliance exam.
The BCSC’s 2020 exam of Lee, Turner & Associates (LTA) paints a picture of slipshod systems for ensuring proper KYC, suitability, and reporting, among others.
That exam – which follows reviews in 2004, 2010, and 2015 – found that the firm failed to maintain current KYC information and did not have evidence of current KYC information to support suitability assessments. The firm also could not produce evidence of its suitability policies and procedures, or activities related to client portfolio monitoring and rebalancing.
The BCSC said LTA also produced inadequate client statements, failed to establish a proper process to make sure buyers and sellers agreed on transaction details, and did not have an adequate process to ensure client trades were done fairly and in a timely manner.
“The BCSC also found that LTA's Chief Compliance Officer and Ultimate Designated Person failed to adequately perform his functions,” the BCSC said, emphasizing that the deficiencies put the firm offside of requirements to manage business risks and meet client suitability obligations.
The BCSC has not received any complaints from clients regarding LTA, and there’s no sign of clients being harmed or being put in unsuitable investments due to the firm’s actions.
But the firm can be put squarely in BCSC’s recidivist list, as the provincial regulator has previously imposed nine terms and conditions on LTA, including hiring an independent compliance monitor at its own cost.
Under a new settlement agreement with BCSC, LTA must now pay the regulator $30,000. That’s on top of $23,000 it previously paid for the costs of the compliance review.