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The Ontario Securities Commission has approved an $11.7-million no-contest settlement agreement with Manulife Securities Inc. and Manulife Securities Investment Services Inc.

This settlement follows allegations by OSC staff that Manulife dealers’ systems of controls and supervision had inadequacies that resulted in certain clients paying excess fees that were not detected or corrected quickly enough.

OSC staff do not allege, and have found no evidence of dishonest conduct by Manulife, a release says on Thursday, and Manulife dealers discovered and self-reported the issue to the securities regulator.

“While having neither admitted nor denied the accuracy of the facts and conclusions of OSC Staff, the Manulife Dealers have agreed to the settlement, and intend to compensate clients a total of $11,700,000 including opportunity costs on fees,” the release says.

In addition to investor compensation, Manulife has made a payment of $495,000 to advance the OSC’s mandate of protecting investors, plus another $25,000 for the costs of the OSC investigation.

“Clients have the right to expect robust compliance systems and controls to protect against excess fees,” Jeff Kehoe, director of enforcement at the OSC, says in a statement.

The OSC says that, after reporting the matter, Manulife dealers “provided prompt, detailed and candid co-operation to OSC Staff.” Manulife has also implemented additional controls and supervision to prevent the issue from happening again.

Separately, Manulife Financial recently settled a securities class action lawsuit — for $69 million — that alleged the misrepresentation of the adequacy of risk management practices and a failure to disclose exposure to equity market and interest rate risks. “The settlement is a compromise of disputed claims and is not an admission of liability or wrongdoing by MFC,” states a settlement notice.

Originally published on Advisor.ca
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