A now defunct stock portfolio manager and its two top leaders have agreed to pay a $300,000 fine to the B.C. Securities Commission for providing “improper incentives,” including sports and concert tickets, gifts, marketing expenses and social events, to investment dealers.
Additionally, Jeffrey David McCord and Martin David Lang agreed to a four-year ban on acting as a Chief Compliance Officer or Ultimate Designated Person of a registered firm. They will also be under “strict supervision” for any other registered activity.
McCord and Lang operated Vertex One Asset Management Inc. in various capacities between 1998 and this year.
According to the commission’s Aug. 24 settlement agreement, Vertex breached mutual fund and securities rules by providing benefits totalling $151,322 to "dealer representatives."
A further examination of the company found failures in its compliance controls, supervision, record keeping and financial reporting, according to the settlement.
“Because of the deficiencies, Vertex’s system of controls and supervision did not sufficiently manage the risks associated with its business or provide reasonable assurance that the firm complied with securities legislation,” the settlement stated, adding “McCord and Lang failed to adequately perform several of their obligations as set out in those sections (rules).”
In 2021, Vertex ceased operations, after it sold mutual fund contracts to Pender Fund Capital in 2019 and its private wealth division to Harbourfront in 2020, according to news releases.
McCord, Vertex and others are being sued by a former employee and early shareholder.
Via his company Rocky Mountain Investment Management, Matthew Wood claimed in B.C. Supreme Court in 2022 that as an early shareholder of Vertex he was entitled to compensation upon his resignation from the company in June 2019. However, Wood alleges McCord and partner John Thiessen orchestrated a fraudulent scheme to transfer assets out of the company in order to not pay him accordingly.
In response, the defendants denied those allegations, stating the company was not obligated to buy Wood’s shares upon resignation. Furthermore, they claimed the three-year delay between Wood’s resignation and his civil claim prejudiced them. The case has not been resolved, according to filings.
McCord and Vertex got off to a rocky start when on Jan. 31, 2007, the company and McCord paid a $3,150 fine to the Manitoba Securities Commission for unregistered trading.
McCord, who resides in an $8-million home in West Vancouver, may be a familiar name to some on the North Shore; his brush with the commission may not have happened had he not been pulled so quickly from the flaming wreckage of a small plane he was in when it crashed at Vancouver International Airport, in 2013.
According to CTV, bystander Erik Hicks likely saved McCord’s life when he pulled McCord from the fire that took the lives of the pilot and co-pilot.
As for Vancouver resident Lang, he too was familiar with regulators prior to the Vertex benefits violations.
On June 12, 2014, Lang reached a settlement with Canada’s regulator of advisors and brokers, the Investment Industry Regulatory Organization of Canada, after acknowledging he filed improper reports to the regulator, between 2010 and 2011. The former exchange examiner from the Vancouver Stock Exchange was fined $15,000.
Lang remains licensed by the Chartered Professional Accountants of B.C. as a chartered professional accountant.
