The Ontario Securities Commission (OSC) has denied a motion to allow Oakville, Ont.-based Pro-Financial Asset Management Inc. to continue selling its funds to new investors while the regulator considers a proposed transaction to sell the funds’ management contracts.
The OSC released its decision Tuesday following a hearing on March 11 to consider whether to allow various index funds offered by Pro-Financial to continue to be sold to new investors. (See Investment Executive, Pro-Financial confirms capital deficiency, MER miscalculations, March 10, 2014.)
Back on March 3, the OSC ordered that the funds could continue to be sold to existing investors, but that sales to new investors would have to cease as the commission has not yet issued a receipt for the funds’ prospectus.
The commission is still considering a proposed deal for Pro-Financial to sell the funds’ investment management contracts to Kingship Capital Corp. of Burlington, Ont. In the meantime, the OSC granted relief to allow the funds to continue to be sold to existing investors until April 7, but not to new investors.
The two firms then brought a motion seeking to allow distributions to new investors to continue as well. According to the decision released Tuesday, OSC staff opposed the firms’ motion, and the commission sided with staff, dismissing the motion and ordering that the distribution of securities of the Pro-Index Funds to new investors cease on March 11.
The relief granted by the OSC to allow sales to continue to existing investors was conditional on Pro-Financial issuing a news release “to ensure that investors receive full disclosure of the matters identified by staff”. In that release, the firm announced its capital deficiency, and the fact that it has apparently miscalculated the MERs in a number of its funds.