Following an Expedited Hearing held on December 17, 2015, with notice to Jacob Securities Inc. (“JSI”), a Hearing Panel of the Investment Industry Regulatory Organization of Canada (IIROC) ordered the following:
- Pursuant to Dealer Member Rule 20.45(1)(a), JSI’s Membership in IIROC is hereby suspended.
- Pursuant to Dealer Member Rule 20.45(1)(d), JSI shall immediately cease dealing with the public.
- JSI shall comply with IIROC Dealer Member Rule 600 throughout the suspension period.
- The Early Warning Level 2 Restrictions and the Additional Business Restrictions imposed on JSI will remain in place during the suspension period.
- JSI shall preserve all books and records, including all hard copy and electronic records in its possession or control, including without limitation, any and all computer servers, hard drives and any other electronically-stored records in any form (the “Records”), for a period of 7 years, and shall make the Records, or such part of them as is requested, available to IIROC Staff on demand.
- JSI shall pay any and all normal course outstanding IIROC and Canadian Investor Protection Fund fees.
- IIROC may move with five days’ notice to re-attend before this panel regarding the continued membership of JSI.
- This Order shall come into effect immediately.
Any JSI clients wishing to place a liquidating transaction or to initiate an account transfer should contact JSI’s carrying broker National Bank Correspondent Network directly at 1-844-662-3058.
The Hearing Panel’s Order can be viewed here.
IIROC has released its reasons for the decision (dated January 14, 2016; posted on IIROC’s website January 26, 2016). They include:
- serious lack of accounting and reporting controls and risk management resulting in misstatements of risk-adjusted capital;
- failure to contain confidential information;
- failure to establish an effective supervisory structure with respect to client accounts and employee activities;
- failure to establish adequate written policies and procedures;
- an undisclosed conflict of interest; and
- failure to meet anti-laundering requirements.
In all, IIROC’s report detailing its examination of Jacob Securities Inc. “listed 40 deficiencies, seven of which were classified as Repeat Significant Items and 21 of which were classified as Significant Items.”