IIROC fines CIBC World Markets $119K for control failures

The Investment Industry Regulatory Organization of Canada has fined CIBC World Markets $119,000 for supervisory failures related to controls over client fee agreements, the regulator said in a release on Thursday.

In a settlement agreement, CIBC World Markets admitted that between 2014 and 2021, it failed to establish and maintain controls to ensure client fee agreements for certain fee-based accounts were accurately recorded in its fee management systems and that clients were charged appropriately.

Some accounts were overcharged, some undercharged and some exhibited no impact, the settlement agreement said. The main causes of the fee issue were a blackout period during system maintenance and manual input errors. According to the settlement agreement, CIBC World Markets determined it had to repay $7.02 million across 12,780 accounts.

The case was resolved by early resolution offer, with the regulator agreeing to a 30% reduction on sanctions based on the firm’s “proactive and exceptional cooperation, remedial measures implemented, compensation to clients and willingness to resolve this matter in a timely manner,” the release said.

CIBC World Markets self-reported the issue in September 2021 and commenced remediation in July 2022. As of November, it had “remediated” all active accountholders and 74% of closed accountholders who were overcharged, the agreement said.

In addition to the fine of $119,000, the firm agreed to pay costs of $5,000 and report on its remedial plan.

Earlier this year, CIBC World Markets was fined $150,000 plus costs for trading supervision failures.

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