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by Mike Caswell
Worldsource Securities Inc., a smaller firm in the Toronto area, has agreed to pay $100,000 to the Investment Industry Regulatory Organization of Canada. The firm has admitted that it overcharged 236 clients who had fee-based accounts. The firm also acted in a conflict of interest with respect to other clients, placing them into an in-house investment fund without fully advising them that there was a financial incentive for Worldsource to have clients in that fund.
The penalty is contained in an agreement that IIROC released on Monday, Jan. 7. The sanctions represent a negotiated settlement, in which Worldsource admitted to the conduct at issue. In addition to the fine, the firm has repaid most of the extra fees that it collected.
Much of the case stems from a group of fee-based accounts that Worldsource had between 2010 and 2016. Clients were to pay an annual fee instead of commissions or the embedded fees found in mutual funds. This, however, is not what happened. According to the settlement, Worldsource charged clients the annual fee and charged them embedded fees for some funds. The end result was that 236 clients paid a total of $148,904 in excess fees. Worldsource has since located most of the clients and returned their money.
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