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On Thursday, OSC announced that it’s approved a no-contest settlement agreement with IPC Securities Corporation and IPC Investment Corporation. As part of the settlement, the firms have agreed to compensate clients that were allegedly affected by control and supervision inadequacies.

The compensation totals $10,970,518, and follows allegations by OSC staff that the IPC firms had inadequate “systems of controls and supervision, which resulted in certain clients allegedly paying, directly or indirectly, excess fees that were not detected or corrected in a timely manner. OSC staff do not allege, and have found no evidence of, dishonest conduct by the IPC dealers,” the commission says in a release. 

The settlement agreement alleges the fees, which included trailer fees and negotiable advisory fees, were collected between 2009 and 2018.

While the IPC dealers have “neither admitted nor denied the accuracy of the facts and conclusions of OSC staff,” the release says, the settlement agreement says they self-reported the matter in 2015. IPC Securities reported to IIROC while IPC Investment reported to MFDA. 

Starting in 2016, the agreement says, both have “taken corrective action designed to address inadequacies and prevent the re-occurrence of similar events in the future.” 

In addition to the compensation of their clients, the IPC dealers made a voluntary, aggregate payment of $460,000 to the commission for its use, the release adds. They have also paid a further $30,000 to cover some of the costs of OSC staff’s investigation.

In an emailed statement to Advisor.ca, John Novachis, president of IPC Investment Corporation and IPC Securities Corporation, said, At Investment Planning Counsel, we value the strength of our relationship with our clients. We have worked closely with the regulators throughout this process and received their approval on our approach to notify and compensate affected clients, which will begin later this month.”

He added, “We appreciate that the Commissioners acknowledged, in their reasons for approving the settlement, the timely and responsible manner in which we responded. As a firm, we have implemented steps to strengthen our controls, and we will continue to further enhance policies and procedures.”

In the OSC release, Jeff Kehoe, director of enforcement at OSC, says, “Registrants are expected to have appropriate controls and supervision in place to protect against excess fees. Regular reviews of a company’s internal compliance systems support the integrity of our financial markets and foster investor confidence.”

To date, the OSC has approved 11 no-contest settlements with other major institutions, resulting in more than $368 million in compensation to investors.

Read the full settlement agreement.

Originally published on Advisor.ca
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