The Ontario Securities Commission (OSC) has ordered that fund manager, Pro-Financial Asset Management Inc. (PFAM), suspend the distribution of its index funds, noting that there remains a discrepancy in the records of certain principal-protected notes (PPNs).
The OSC issued an order indicating that the condition that it imposed on PFAM’s registration back in March, which restricted it to distributing securities of its funds to existing security holders, be replaced with the requirement that it stop distributing the funds altogether.
The order notes that on May 23, OSC staff filed an affidavit confirming that a discrepancy between the records of the record-keeper and the trustee for certain PPNs remains unchanged, and that the total cash obligation to PPN noteholders exceeds the amount in the trustee’s records by $1.2 million. The filing also updated the commission on the payments made by the firm for maturing PPNs in March and April, it says.
The firm announced that it will have the right to apply to resume distribution when the audited financial statements of the funds for the year ending December 31, 2013 are filed with the commission. It said that it expects to file the funds’ audited financial statements on June 6, and that it will request reinstatement of distribution after that.
In the meantime, the OSC order notes that both sides have agreed to extend the temporary order, which was first imposed in May 2013, suspending the firm’s registration as an exempt market dealer and imposing terms and conditions on its fund manager registrations to July 4, and to adjourn the hearing to July 2. A confidential pre-hearing conference is slated for June 5.