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Fund manager and exempt market dealer Fieldhouse Capital Management Inc. (FCMI) and its former CEO have agreed to pay almost $500,000 to resolve allegations arising from compliance deficiencies uncovered by the British Columbia Securities Commission (BCSC).

The BCSC launched a compliance exam of FCMI in 2021, which the regulator said highlighted various shortcomings, including alleged suitability violations and weaknesses in FCMI’s know-your-client (KYC) procedures.

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That exam resulted in a settlement with a former portfolio manager at the firm, who agreed to an eight-year ban and a $60,000 payment to the BCSC.

The BCSC has now sanctioned FCMI, which agreed to pay almost $400,000 to clients and $75,000 to the regulator to resolve allegations that it failed to have an adequate compliance system, failed to meet its KYC and suitability obligations, and failed to adequately identify and address conflicts of interest involving charges imposed on trade tickets.

The firm’s former CEO and chief compliance officer (CCO), William Douglas Sereda, also agreed to pay $25,000 and to not seek registration as a CCO for five years after admitting to being responsible for the compliance shortcomings.

The BCSC noted that, in the wake of the original compliance exam, it imposed terms and conditions on FCMI’s registration that required the firm to hire an independent monitor at its own expense.

The firm also hired a consultant and beefed up its compliance procedures. As the firm’s systems have been improved, the registration conditions have been removed, the regulator said.

Additionally, the settlement noted that FCMI has already paid over $1.35 million to certain clients through civil lawsuits and other processes arising from its alleged misconduct, including repaying management fees and trade ticket charges to affected clients. The firm also paid $64,800 to the BCSC for the costs of the 2021 compliance exam.

The B.C. regulator said the firm co-operated with its investigation and enforcement proceedings.