Regulator seeks to address concerns about client over-concentration
Citing concerns about possible client over-concentration, the Ontario Securities Commission (OSC) has imposed conditions on the registration of a small fund manager, Sharbot Lake, Ont.-based W.A. Robinson Asset Management Ltd. (WARAM).
Following an “opportunity to be heard”, an OSC director approved a joint recommendation from OSC staff and the firm that set conditions on its registration. Those conditions were designed to prevent over-concentration in securities of a related mortgage investment entity, Frontenac Mortgage Investment Corp. (FMIC), that’s managed by WARAM.
The conditions include that the firm must retain an independent consultant to come up with a methodology for determining appropriate concentration in FMIC shares. Further, it must review the suitability of clients’ holdings using that methodology, and it must report back to the OSC on the findings of these reviews.
According to the decision, a compliance review in 2019 found two issues with the firm: “A majority of WARAM clients are overly concentrated in shares of FMIC; and WARAM does not have an adequate suitability process.”
The firm consented to the imposition of temporary conditions on its registration, but disputed OSC staff’s concerns with its compliance. It also denied that it has violated securities law.
The decision also noted, “FMIC has consistently reported a net profit” and that the OSC hasn’t received any complaints from investors about the firms mentioned.
Source: Investment Executive