For accepting marketing support from an investment fund manager they worked with – without disclosing the payments or seeking approval from their own firm – Lyle Langlois and James Brown have agreed to pay a fine each of $10,000, disgorge $65,571.44 and pay costs totalling $5,000 after entering into a settlement agreement with the Investment Industry Regulatory Organization of Canada (IIROC).

The pair admitted that between 2014 and 2016, while they were registered representatives at Scotia Capital Inc. operating as Langlois Brown Wealth Management, they accepted sponsorship payments directly from Vertex One Asset Management Inc., a mutual fund dealer registered with the B.C. Securities Commission, to support an amateur cycling team and several charitable and amateur golf tournaments sponsored by Langlois Brown. The monies received were added to about $70,000 of the respondent’s own funds to support the initiatives.

Langlois, employed in the securities industry since 1986 and Brown, employed in the industry since 1997 are today registered with iA Private Wealth Inc.  

Their relationship with Vertex started in 2002 when the pair began offering the firm’s hedge fund to clients. In or around 2014 the firm had approximately 10 per cent of its total client assets invested in Vertex funds. IIROC says there are no issues regarding the suitability of the Vertex holdings.

When the investment manager’s representatives and compliance officer indicated they could provide marketing support outside of the traditional regulatory framework, the pair accepted the offer, deposited the monies into Langlois Brown bank accounts and used the funds to pay for the amateur sport and charitable golf tournament fees and sponsorships.

“The respondents disclosed to their firm their sponsorship of the amateur cycling team but did not disclose the payments from Vertex or seek the approval of their firm for the receipt of the payments from Vertex,” the settlement agreement states.

IIROC adds that the receipt of payments had no impact on the Vancouver firm’s recommendations made to clients and that the funds were used for the stated purpose and not retained by either representative. They also agree the respondents did not intentionally set out to breach the rules when they accepted the marketing support. “No attempt was made by the respondents to conceal from staff or their dealer member the fact that they had received the payments from Vertex in this way.”