B.C. firm and former CEO agree to pay nearly half a million dollars for compliance deficiencies

VANCOUVER, BC, July 2, 2024 /CNW/ - A B.C. firm and its former CEO agreed to pay $493,457 as part of a settlement agreement with the B.C. Securities Commission (BCSC) for failing to comply with several investor protection requirements, after a BCSC examination revealed significant deficiencies.

In 2021, BCSC staff conducted a compliance examination of Fieldhouse Capital Management Inc. (FCMI), which is registered in B.C. as a portfolio manager, investment fund manager and exempt market dealer. At the time, Vancouver resident William Douglas Sereda was the CEO, the chief compliance officer (CCO) and the ultimate designated person (UDP), the person responsible for the firm's overall compliance with securities laws.

The compliance examination found significant deficiencies with the firm, including that it:

• incorrectly classified one investment fund as lower risk than it actually was
• allowed some clients to be placed into unsuitable investments
• placed itself in a conflict of interest with certain clients, and
• failed to maintain sufficient and current "know your client" information, suitability information, due diligence and research, conflicts, personal trading and risk management.

FCMI admitted that because of the deficiencies, it failed to have an adequate and effective compliance system and failed in its obligations as a portfolio manager with regards to "know your client" information and suitability determinations. FCMI also admitted that it failed to identify, address and disclose material conflicts of interest and did not deal fairly with clients.

Sereda, who remains with FCMI in various capacities, acknowledged that he failed to adequately perform his functions as CCO and UDP, which led to the firm's contraventions.

As part of the settlement agreement, FCMI agreed to pay $393,457 to the affected clients and $75,000 to the BCSC. Sereda agreed to pay $25,000 to the BCSC and agreed not to seek registration as a CCO or a UDP of any registrant for five years.

After identifying the deficiencies, the BCSC imposed terms and conditions on FCMI in 2022  – including the hiring of an independent compliance monitor for one year at its own expense – that were aimed at mitigating the ongoing risks to clients and improving its compliance system. The BCSC removed the terms and conditions after FCMI corrected the outstanding deficiencies.

In 2023, the BCSC reached a separate settlement agreement for a former FCMI portfolio manager who agreed to pay $60,000 to the Commission for steering his clients into an unsuitable investment.

About the B.C. Securities Commission (bcsc.bc.ca) 

The B.C. Securities Commission, an independent provincial government agency, strives to make the investment market benefit the public. We set rules, monitor compliance by industry, take action against misconduct, and provide guidance to investors and industry. As guardians of B.C.'s investment market, we're committed to maintaining a market that is honest, fair, competitive and dynamic, enabling British Columbians to thrive.  

Learn how to protect yourself and become a more informed investor at www.investright.org

SOURCE British Columbia Securities Commission

Media Contact: Brian Kladko, 604-899-6713; Public inquiries: 604-899-6854 or 1-800-373-6393 (toll free), [email protected]