The British Columbia Securities Commission (BCSC), one of Canada’s leading independent financial market regulators, has reached a settlement with a pair of HSBC subsidiaries, after charging excess fees to select clients, according to a BCSC statement.
The settlement pits HSBC Investment Funds Canada Inc. (HIFC) and HSBC Private Wealth Services Inc. (HPWS) against investors, following a BCSC investigation that found that the entities had wrongly charged overzealous fees to client accounts. The nature of the fees stemmed from lapses in control and supervision, namely as HIFC in particular already institutes a policy to help guide clients to lower priced investment funds and services.
However, despite the measures in place, clients were still charged extra fees. By extension, HPWS utilizes a similar policy that seeks to advise and steer its clients in terms of fees – like its counterpart, the group’s inconsistencies in this area led to select clients incurring larger than normal fees.
Despite the violations, both HIFC and HPWS cooperated fully the BCSC investigation and staff throughout the duration of the review, also issuing a full compensation plan. This included the reimbursement by HIFC of over 4,651 client accounts for a total of $7.1 million, while HPWS compensated a total of 10 client accounts for $10,100.
Moreover, HIFC and HPWS also paid a collective settlement of $300,000 to BCSC, as well as $20,000 in costs incurred.
Earlier this month, the BCSC also lobbied a fine of $400,000 in penalties and the permanent ban of John Ferdinand Alexander Spangenberg (also known as ‘Johny’ and ‘JFA’) and two of his companies in connection with capital markets fraud. The edict followed after a panel investigation in March 2016 Spangenberg – a former resident of Holland – and two of his entities, Odyssey Renewable Growth Inc. and geoTreasuries Clean Energy Limited, had fraudulently raised over $170,000 from at least 6 B.C. residents between June 2011 and December 2013.
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