The Ontario Securities Commission (OSC) will hold a hearing on Thursday to consider a no-contest settlement with various subsidiaries of Bank of Montreal (BMO), including BMO Nesbitt Burns Inc., BMO Private Investment Counsel Inc., BMO Investments Inc. and BMO InvestorLine Inc.
According to the OSC’s allegations, the firms self-reported compliance weaknesses that meant certain clients paid excess fees, including clients who paid embedded trailers on products that were held in fee-based accounts; and, clients that were not advised that they were eligible for lower-fee versions of certain investment funds. In some cases, the issues occurred over eight years, from 2008 to 2016.
The OSC indicates that it has not found any evidence of dishonest conduct by the firms and that they’re paying compensation to clients who were harmed. Furthermore, the BMO firms have also implemented additional controls to prevent a re-occurrence of these issues in the future.
The details of any regulatory sanctions will only be revealed if the OSC approves the settlement at its hearing. No-contest settlements allow firms to resolve disciplinary cases without admitting any wrongdoing. Since the OSC adopted the process, it has settled a number of similar cases with large Bay Street firms.
In late October, an OSC hearing panel approved a no-contest settlement with CIBC World Markets Inc., CIBC Investor Services Inc. and CIBC Securities Inc. that saw them pay more than $73 million in compensation to clients and another $3 million to the regulator as part of a no-contest settlement agreement in connection with client overcharging that occurred for more than 10 years.