Real estate company Clifton Blake Asset Management Ltd. (CBAM) and its owners have settled allegations that they violated securities laws when selling units in a mortgage investment fund.
On Thursday, the Ontario Securities Commission (OSC) approved a settlement in which CBAM and its owners agreed to a $100,000 fine, a reprimand and a promise to honour redemption requests from affected investors, along with other conditions.
The settlement resolves allegations that the respondents in the case failed to meet securities registration, prospectus and know-your-client (KYC) requirements when they sold $25 million worth of units in a pooled mortgage fund, the Clifton Blake Mortgage Fund Trust, to 144 investors.
According to the regulatory hearing panel’s oral reasons approving the settlement, the improper sales came to light when a subsidiary of CBAM applied for registration as an exempt market dealer (EMD).
The firm then voluntarily submitted to a compliance exam by the OSC, agreed to cease trading the securities and hired an EMD to review the suitability of the sales it had carried out.
That review found 12 investors had made unsuitable investments, and that they were given the opportunity to get their money back, but they all declined.
The settlement notes that the respondents in the case cooperated with regulators, and that there was no evidence of dishonest conduct on their part.
“I agree that the respondents have taken responsibility for their actions and have sought to rectify the effects of non-compliance on affected investors in CBMF Trust securities,” the panel indicated in its reasons.