The Investment Industry Regulatory Organization of Canada (IIROC) has withdrawn disciplinary allegations against the former chief compliance officer of failed securities dealer Pace Securities Corp. (PSC).
The self-regulatory organization dropped its enforcement charge against Gerald Douglas McRae, former COO at PSC, “based upon a reassessment of the case.”
Back in June 2020, IIROC brought an enforcement proceeding against McRae and former head of PSC Joseph Anthony Thomson.
Last week, the SRO settled with Thomson. Now, it has dropped its charge against McRae, who it had accused of failing to supervise Thomson, and failing to oversee the firm’s compliance with IIROC rules.
The IIROC hearing panel’s settlement with Thomson saw him admit to several violations and agree to a five-year suspension from serving as an ultimate designated person (UDP), a one-year suspension from registration, and to pay $100,000 in costs.
In settling, Thomson admitted that he violated several IIROC rules, including that “he failed to identify and address conflicts of interest” in the best interests of clients; that he failed to ensure that investments in a proprietary product adhered to the terms of its offering memorandum; and that he failed to supervise PSC and to ensure suitability.
PSC was suspended by IIROC on May 21, 2020 and the firm was liquidated.
In July, the Ontario Superior Court of Justice approved a $40 million settlement with harmed investors, including PSC clients and others that held certain proprietary products that were central to IIROC’s disciplinary case against the executives.