Following a hearing on July 11, 2012, a hearing panel of the Investment Industry Regulatory Organization of Canada (IIROC) accepted a settlement agreement between IIROC staff and Laurentian Bank Securities Inc.
Laurentian Bank Securities Inc. admitted that it failed to offer training to give its supervisors sufficient knowledge to adequately supervise the trading of leveraged ETFs in retail client accounts.
Read: Advisors must understand risks for certain ETFs
Specifically, Laurentian Bank Securities Inc. admitted to the following violations:
(a) Between October 2008 and April 25, 2010, Laurentian Bank Securities failed to exercise adequate and effective supervision by not taking every measure to ensure that its supervisors fully understood the features and risks inherent in the leveraged Exchange-Traded Funds in the accounts of two retail clients, contrary to Part 3.A (1) of IIROC Dealer Member Rule 2500; and
(b) Between October 2008 and April 25, 2010, Laurentian Bank Securities failed to use due diligence, by neglecting to offer training to ensure that its supervisors had full knowledge to adequately supervise the trading of leveraged Exchange-Traded Funds in its retail client accounts, contrary to Rule 18.3(b), Rule 38.2(b) and Part 3A (5) of Rule 2500 of the IIROC Dealer Member rules;
Read: ETF firms under scrutiny
Pursuant to the settlement agreement, Laurentian Bank Securities Inc. agreed to the following penalty:
(a) A fine of $140,000.
Laurentian Bank Securities Inc. also agreed to pay costs in the amount of $10,000.
