TORONTO, April 27, 2012 /CNW/ - The Ontario Securities Commission today approved a settlement agreement reached between Staff and Trapeze Asset Management Inc. (Trapeze), Randall Abramson and Herbert Abramson, who admitted to breaching the 'Know your client' (KYC) and 'Suitability' obligations as set out in NI 31-103, and section 129.2 of the Securities Act (Ontario).
Trapeze and the Abramsons admitted to inaccurately assessing the risk associated with many of the investments purchased on behalf of clients in managed accounts between September 30, 2006 and August 31, 2010, and to purchasing investments on behalf of virtually all clients in securities of the same issuers, resulting in a failure to ensure that the investments made on behalf of clients were suitable for all clients.
Trapeze and the Abramsons further admitted that in some cases they failed to adequately ascertain clients' investment needs, experience, investment objectives and risk tolerance prior to investing those clients' assets. Some of the inaccurate statements regarding the risk levels of certain securities and/or issuers were repeated in Trapeze's written marketing materials.
"Participation as a registrant in Ontario's capital markets is a privilege that comes with significant responsibilities," said Tom Atkinson, Director of Enforcement at the Ontario Securities Commission. "The KYC and Suitability obligations on registrants are key protections for investors and the appointment of a consultant at Trapeze's expense should ensure future compliance by Trapeze with these obligations."
Under the terms of the settlement agreement, Trapeze is required to retain a consultant to review its practices and procedures regarding its KYC and Suitability obligations, and to conduct client account reviews for all client accounts in accordance with those new practices and procedures (with the consultant attending a sample of such reviews in its discretion). Moreover, Trapeze and the Abramsons must pay an administrative penalty of $1 million, plus $250,000 towards the costs of Staff's investigation.
A copy of the Settlement Agreement and Order of the Commission in this matter are available on the OSC website at www.osc.gov.on.ca.
The mandate of the OSC is to provide protection to investors from unfair, improper or fraudulent practices and to foster fair and efficient capital markets and confidence in capital markets. Investors are urged to check the registration of any person or company offering an investment opportunity and to review the OSC's investor materials available at www.osc.gov.on.ca.
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