IIROC settles with Paul Clarke, Todd O’Reilly

A hearing panel of the Investment Industry Regulatory Organization of Canada (IIROC) has accepted settlement agreements between IIROC staff and Paul Clarke and Todd O’Reilly.

In the agreements, Mr. Clarke and Mr. O’Reilly admit that they failed to transact business openly and fairly, and in accordance with just and equitable principles of trade, contrary to the Universal Market Integrity Rules (UMIR).

In his agreement, Mr. Clarke agrees to pay a $110,000 fine and $5,000 in costs. In Mr. O’Reilly’s agreement, he agrees to pay a $15,000 fine and $2,500 in costs.Specifically, Mr. Clarke and Mr. O’Reilly each violated UMIR by entering orders without identifying client accounts, holding the unallocated trades in a firm inventory account for up to 30 days, and later giving preferential treatment to clients by, on more than one occasion, allocating those securities to the account of a client who had not placed the original order. This conduct violates UMIR 2.1 and UMIR Policy 2.1.

Both individuals also violated UMIR 10.11(1) by causing audit trail violations by entering orders with repeated deficiencies such as failing to record client account numbers, order price and/or quantity, as required by Part 11 of the Trading Rules (National Instrument 23-101).

The violations occurred between April 2006 and June 2007. During this period, Mr. Clarke was a Registered Representative and Mr. O’Reilly was an Investment Representative at National Bank Financial Inc., an IIROC-regulated firm. IIROC began its formal investigation into Mr. Clarke’s conduct on June 17, 2008 and into Mr. O’Reilly’s conduct on June 24, 2008. Mr. Clarke and Mr. O’Reilly are currently registered with National Bank Financial.

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