RBC agrees to pay $45 million to settle trailer fee class action
RBC subsidiaries will pay $45 million to settle a class action lawsuit regarding improper trailing commissions paid to discount brokers.Summary
Two subsidiaries of the Royal Bank of Canada, RBC Global Asset Management Inc. and RBC Investor Services Trust, have agreed to a $45 million settlement to resolve a class action lawsuit. The lawsuit, initiated by plaintiff Peter Ross in 2018, alleges that certain mutual fund investors were charged improper fees through trailing commissions paid to discount brokers.
The core of the allegation is that these commissions were paid to online-based discount brokers, such as RBC Direct Investing, for investment advice and services that they are not authorized to provide. While the brokers primarily offer order execution services, the lawsuit claims the payment of these commissions increased management fees for investors. RBC's subsidiaries have denied the allegations.
Eligible claimants include individuals who held units of RBC or PH&N mutual funds through a discount broker between December 28, 2003, and July 25, 2024. A hearing at the Ontario Superior Court of Justice is scheduled for September 8 to approve the settlement and consider legal fees, which may reach up to $12.6 million.
(Source：Financial Post)