Fred Lum/The Globe and Mail
Bay Street asset manager Sentry Investments Inc. broke mutual-fund sales rules by paying for outside financial representatives to attend a conference in California and providing them with gifts and other benefits, the Ontario Securities Commission alleges.
The OSC revealed late Friday that staff reached a settlement agreement with Sentry and former chief executive officer Sean Driscoll. No terms of the settlement have been disclosed, but will become public if the agreement is accepted by a panel at a hearing scheduled for Wednesday.
In a statement of allegations, the OSC said Sentry held a conference in Beverly Hills, Calif., in September, 2015, and paid for representatives from Canada to attend, including covering some of their travel, accommodation and "personal incidental expenses."
Sentry, which manages more than $18-billion in investor assets, also provided gifts and "non-monetary benefits" to representatives who attended, as well as "monetary benefits" in the form of gift certificates.
The regulator said the primary purpose of the conference "was not the provision of educational information," but did not explain what occurred at the event.
The OSC said mutual-fund companies are prohibited from paying money or non-monetary benefits to a dealing representative who advises clients on mutual-fund purchases, except for benefits that are "promotional in nature and of minimal value."
The OSC also alleged Sentry provided inappropriate non-monetary benefits to representatives on an annual basis between 2011 and 2016, including spending on "one-time events" and gift cards, but did not provide further details.
The regulator provided no information about how much money Sentry spent on the programs. It said the firm failed to keep adequate records and controls over its sales practices.
Mr. Driscoll, who stepped down as CEO of Sentry in January after an investigation into its sales practices, is accused of providing tickets to a representative to attend the Montreal Grand Prix Formula 1 race in 2015 and 2016, the OSC said.
The regulator did not make any other allegations against Mr. Driscoll, but said he "failed to meet his obligations" as the ultimate designated person in charge at Sentry and also acted "contrary to the public interest."
Janet McFarland