Gavel and judgement on desk

The Ontario Securities Commission (OSC) will hold a hearing next week to consider a possible settlement with Toronto-based portfolio manager Questrade Wealth Management Inc. (QWM) in connection with WisdomTree Asset Management Canada Inc.’s purchase of eight ETFs managed by QWM in 2017, the OSC announced Thursday.

According to the OSC’s statement of allegations, QWM is accused of failing to properly address possible conflicts of interest following the sale of the ETFs to WisdomTree. Specifically, QWM did not properly document whether the portfolio manager’s purchase of approximately $15 million in WisdomTree ETFs for client portfolios immediately following the sale on the funds to WisdomTree gave rise to a conflict.

“In the context of the transaction, this significant purchase of WisdomTree ETFs required Questrade to determine if a conflict of interest existed between Questrade and its clients,” the OSC says in the allegations.

The commission alleges the QWM’s staff didn’t properly carry out that assessment, and failed to document its decision for a month.

“In the context of the transaction, Questrade’s review … failed to meet the high standard of conduct that is expected of a registrant in taking appropriate steps to ensure that the trade was suitable for its clients, and that it did not create a conflict of interest …”

The allegations have not been proven.

The hearing will take place on Nov. 27 in Toronto. Details of the settlement, including any sanctions, will only be revealed if the settlement is approved at the hearing.