Regulator alleges firm failed to provide clients with position cost information in account statements
The Investment Industry Regulatory Organization of Canada (IIROC) is bringing disciplinary action against TD Waterhouse Canada Inc., alleging that the brokerage firm failed to provide clients with certain cost disclosure required under the second phase of the client relationship model.
IIROC announced on Tuesday that it will hold a hearing on June 5 in Toronto to consider allegations that TD Waterhouse failed to provide clients with position cost information in their quarterly account statements for certain holdings.
The allegations have not been proven.
According to IIROC, the issue came to light after a TD Direct Investing client complained in April 2017, prompting an IIROC investigation, which concluded that the firm was not fully complying with position cost disclosure requirements.
The self-regulatory organization alleges that the firm had the ability to comply with the requirements by December 31, 2015. But, IIROC states, “in the spring of 2015 the [firm] identified what it considered to be potential litigation risks and client experience issues that might result from its proposed manner of implementing compliance with the position cost requirements.”
As a result, the firm decided to pursue an alternative technical solution, knowing that would leave certain client positions out of compliance with the requirements, with the plan to bring those positions into compliance by mid-2016.
However, the regulator says, “The completion date for the proposed project was then delayed until 2017 and presently remains uncompleted.”
The firm has since sought an exemption from IIROC to address the issue of the non-compliant positions. In the meantime, it will face a disciplinary hearing before the regulator.