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HSBC Global Asset Management (Canada) Ltd., a fund manager, is paying more than $1 million to resolve regulatory concerns that investors may have been harmed when they were forced to redeem mutual funds after the firm stopped doing business with certain independent dealers.

In a settlement with the British Columbia Securities Commission (BCSC), HSBC agreed to pay $350,000 to the regulator, and to set aside $700,000 to pay compensation to affected investors.

The deal stems from a finding that the firm violated securities rules when it required certain investors to redeem their HSBC mutual fund holdings after it terminated its distribution agreements with 51 third-party dealers.

Those dealer agreements were terminated in order to comply with new global compliance standards that were being implemented throughout HSBC Group.

In total, the firm required 1,042 accounts at 51 dealers to redeem approximately $21.9 million worth of fund holdings.

According to the settlement, the action was potentially unfair to investors who weren’t allowed to keep holding units that were bought on the basis that they were suitable for long-term time horizons.

The action could have caused other kinds of harm to investors as well, the agreement said — such as unanticipated tax consequences, or requiring investors to crystallize unrealized losses.

At the same time, the settlement also acknowledges that the firm didn’t profit from the required redemptions and that it acted in “good faith.”

The agreement also noted that HSBC fully cooperated with the BCSC, made early admissions about the alleged conduct and committed to compensating harmed investors.

In a statement, HSBC said, “We initiated our actions in accordance with the terms and conditions of the dealer agreements and in good faith with a view to advancing the global standards which we believed to be in the best interests of the funds. The agreement acknowledges that HSBC did not profit in any way in this matter. We are pleased to have this matter settled and have already begun the process of compensating the impacted unitholders.”

Of the $700,000 that the firm agreed to set aside for investor compensation, HSBC has already determined that $625,000 will be paid to approximately 750 accounts. Any unpaid compensation amounts will be paid to the commission.