Mutual fund company Carte Wealth Management Inc. has been ordered to pay a fine of $10,000 and costs in the amount of $5,000 after a hearing panel of the Mutual Fund Dealers Association of Canada (MFDA) found the firm failed to maintain a rule that it keep a certain level of capital at all times.
In a settlement agreement made public in late December, the panel said Carte Wealth was put on early warning status a number of times from September 2008 to September 2015 after it failed to maintain minimum capital of $75,000 and risk adjusted capital (RAC) greater than zero. During this time, the panel said the company was only able to temporarily rectify the deficiencies from time to time with capital injections through subordinated loans.
Maintains positive RAC since January 2020
However, in January 2020, the firm received an additional $30,000 through a subordinated loan, and since then, it has maintained a positive RAC.
As well, Carte Wealth has hired a chartered accountant who is responsible for the firm’s financial affairs on a full-time basis.
In addition, the firm has established procedures to prevent its RAC from falling below zero again.
The company agreed to the terms of settlement.
