TORONTO, Feb. 10, 2016 – CI Financial Corp. (“CI”) issued the following statement with regard to the no-contest settlement agreement entered into today between its subsidiary CI Investments Inc. and the Ontario Securities Commission (the “Settlement Agreement”).
CI Financial will release its audited financial results later today which include a provision of $10.75 million for remediation of the administrative error which is the subject of the Settlement Agreement. This amount includes the cost of the voluntary payment which CI Investments has agreed to make to the Ontario Securities Commission.
The Settlement Agreement is in respect of an administrative error that CI Investments discovered in April 2015 and reported to the Ontario Securities Commission. As a result of this error, approximately $156.1 million of interest that had accrued in the bank accounts of seven CI Investments mutual funds had not been properly recorded as an asset in the accounting records of those funds. As a result, the NAVs of these funds, and any funds that had invested in these funds, had been understated for several years. The accumulated interest is in bank accounts owned by the mutual funds and at all times remained in those bank accounts as an asset of these funds and was never co-mingled with the property of CI Investments.
Once the error was discovered, CI Investments, with the assistance of an independent consulting firm, undertook a comprehensive investigation into how the error occurred and developed a plan to put affected investors into the economic position they would have been in if the interest had been recorded. The remediation plan will return the entire amount of the accumulated interest to current and former investors in the funds without deduction of any management fees or administrative costs. Over 48% of retail investors in the affected mutual funds will receive payments of $100 or less.
CI Investments has already undertaken enhancements to its systems and processes to help prevent similar errors from occurring in the future.
CI Financial Corp. (TSX: CIX) is an independent, Canadian-owned wealth management company. CI offers a broad range of investment products and services, including an industry-leading selection of investment funds, and is on the Web at www.cifinancial.com.
This press release contains forward-looking statements with respect to CI and its products and services, including its business operations and strategy and financial performance and condition. Although management believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from expectations include, among other things, general economic and market factors, including interest rates, business competition, changes in government regulations or in tax laws, and other factors discussed in materials filed with applicable securities regulatory authorities from time to time.
For further information: Murray Oxby, Director, Communications, CI Investments Inc. (416) 681-3254