Ontario Securities Commission to hold hearing over accusation portfolio manager failed to properly address potential conflicts of interest
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Questrade Weath Management has been accused of failing to properly address and report possible conflicts of interest in connection with WisdomTree Asset Management’s purchase of eight of its ETFs for about $15 million.
The Ontario Securities Commission (OSC) will hold a hearing on November 27 to consider the allegations and a possible settlement with the Toronto-based portfolio manager.
According to the OSC’s statement of allegations, One Capital Management LLC (OCM) acted as a registered sub-advisor to Questrade and provided investment advice for managing the PIQ portfolios.
The OSC said: “Given OCM’s request to execute the trade quickly, Questrade’s staff did not wait to receive any due diligence documents from OCM and relied only upon OCM’s oral assurances. Questrade also failed to document why it determined no conflict of interest arose from the July Trade until approximately a month after the July Trade, contrary to its own policies.
“In the context of the transaction, Questrade’s review of the July Trade failed to meet the high standard of conduct that is expected of a registrant in taking appropriate steps to ensure that the July Trade was suitable for its clients, and that it did not create a conflict of interest, which potentially put its PIQ clients at risk and was contrary to the public interest.”
The allegations also state that Questrade failed to document its decision regarding possible conflicts of interest for a month.
The OSC further accused Questrade of failing to take appropriate steps to determine whether a conflict of interest existed before investing client money.
“As a result, Questrade failed to meet the high standards of conduct expected of a registrant when identifying and responding to conflicts of interest, which potentially put its clients at risk that the July Trade was in the best interests of its client.”
