Capstone Asset Management has paid a $12,000 fine to the B.C. Securities Commission (BCSC) for failing to maintain the necessary insurance coverage and for inadequate compliance policies and procedures related to insurance.
Meted out by BCSC executive director Peter Brady under a newly implemented enforcement mechanism that allows financial penalties to be imposed without a hearing before a panel of commissioners, the penalty marks the first instance of the BCSC utilizing its authority that was granted in 2020 through amendments to the Securities Act.
The changes enabled the executive director to directly impose administrative penalties for breaches of investment market regulations. Notably, the BCSC is the sole Canadian securities regulator endowed with this capability.
Langley-based Capstone Asset Management is a firm registered under the Securities Act as an investment fund manager, exempt market dealer, and portfolio manager. The firm’s underinsurance followed a prior BCSC staff finding of a similar non-compliance with 2018 insurance requirements.
It was noted that no clients were harmed due to the company’s shortcomings.
Brady stated that a $12,000 penalty was suitable for the combined infractions. The firm accepted the finding and paid the fine without contest.
The executive director went on to comment: “The purpose of administrative penalties imposed by notice is to address violations of investment rules that typically won’t be serious enough to warrant a full-blown enforcement hearing.
“They help the BCSC encourage compliance with a wide range of industry rules that protect investors or make investment markets work efficiently.”
An independent provincial government agency, the BCSC strives to make the investment market benefit the public by setting rules, monitoring industry compliance, taking action against misconduct, and providing guidance to investors and industry. Its goal is to maintain an honest, fair, competitive, and dynamic market.
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