The Canadian Investment Regulatory Organization (CIRO) announced that it has accepted a settlement agreement with HSBC Securities (Canada) Inc. after the firm admitted that it failed to establish and maintain controls to ensure that clients were charged appropriately.

Discovered by the firm in December 2022 and self-reported to CIRO in March 2023 following an investigation to determine the scope of the matter, the firm found that certain clients who qualified as “premier” clients were not coded as such in the firm’s information systems management system.

The overcharges occurred between October 2018 and December 2022. The settlement agreement with CIRO states that a regularly scheduled reconciliation process between two internal systems had not been implemented, which led to the incorrect charging of client fees.

All told, it was determined that the bank inadvertently overcharged approximately 1,234 clients excess fees, cumulatively worth $198,674. The firm remediated the issue by compensating clients in June 2023 and by implementing internal protocols to ensure that appropriate fees are charged going forward. Where individuals were no longer clients, the firm mailed checks to the addresses listed on file.

CIRO says enforcement staff agreed to a 30 per cent reduction of the fine it would otherwise have agreed to, “based on the proactive and exceptional cooperation by the respondent, the remediation measures implemented, the compensation paid to clients and the respondent’s willingness to resolve this matter in a timely manner.” 

In addition to costs in the amount of $5,000, HSBC Securities agreed to pay a fine in the amount of $52,500.