CI Investments to return $156 million to ‘harmed investors’ in OSC settlement

CI Investments Inc. has entered a no-contest settlement with the Ontario Securities Commission that will begin to see the fund management firm return $156.1 million to “harmed investors” after self-reporting errors in calculating fund unit values.

The regulator said Wednesday it is the biggest quantity of investor compensation to date in a no-contest settlement — a kind of settlement recently adopted by the OSC that does not require an admission of wrongdoing.   

Related

Maureen Jensen nominated as next chair of the Ontario Securities CommissionOSC assumes ‘market manipulation’ case involving day traders in China

This settlement followed allegations by OSC staff that CI’s system of controls and supervision, and its monitoring and oversight of an outsourced company, were not sufficient to address a distinctive cash collateral feature of certain funds, and also to make sure that interest earned in related accounts was recorded and included in the net asset value (NAV).

Staff alleged these inadequacies resulted in the NAV being understated which this error wasn’t promptly identified and corrected.

“Staff don’t allege, and have found no evidence of, dishonest conduct” by CI, the regulator said inside a statement Wednesday.

In addition to returning funds to harmed investors, CI designed a payment of $8 million to the OSC to succeed the regulator’s mandate of protecting investors. The fund management firm designed a further payment of $50,000 towards the costs from the investigation.? 

CI has developed and is implementing enhanced control and supervision procedures, and, under the the settlement agreement, is required to report ongoing progress to the OSC.