RBC, Scotia and TD settle with IIROC

By James Langton | November 4, 2019 | Last updated on November 4, 2019
1 min read
© Burmakin Andrey / 123RF Stock Photo

A trio of bank-owned investment dealers has agreed to pay over $1.5 million to settle allegations that they violated trading rules when helping bring a cross-border bought deal to market.

An Investment Industry Regulatory Organization of Canada (IIROC) hearing panel accepted a settlement between the regulator and the three firms — RBC Dominion Securities, Scotia Capital Inc. and TD Securities Inc. — that participated in a deal to help sell off Royal Dutch Shell plc’s 8% stake in Canadian Natural Resources Ltd. in 2018.

In carrying out the transaction, the regulator found that the firms violated IIROC rules by settling trades without entering the orders on a marketplace, or seeking an exemption.

The relatively technical violation didn’t cause any harm to clients, and happened after the deal’s lead underwriter, Goldman Sachs & Co. LLC, found that it was unable to settle trades for Canadian clients as originally planned.

The settlement indicated that the three firms relied on steps taken by Goldman Sachs in the U.S. to fulfil their regulatory obligations.

However, the panel said that the U.S. filings “did not provide sufficient transparency to IIROC or Canadian market participants” and didn’t meet their requirements under the IIROC trading rules that are intended to ensure “transparency and a level playing field for market participants.”

As a result, the firms each agreed to pay $500,000 penalties and $10,000 in costs to settle IIROC’s allegations.

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James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.