CIRO sanctions dealer’s supervisory lapses

A regulatory hearing panel approved a settlement with Calgary-based Leede Jones Gable Inc., which admitted to a handful of supervisory failings.

In a settlement with the Canadian Investment Regulatory Organization (CIRO), the firm agreed to pay a fine of $150,000 and $15,000 in costs to resolve allegations that it violated the self-regulatory organization’s rules.

Specifically, the firm admitted it failed to properly supervise a representative, Larry Martin, who was sanctioned in his own settlement with CIRO predecessor the Investment Industry Regulatory Organization of Canada (IIROC).

In 2021, IIROC reached a settlement with Martin, who admitted he failed to fulfil his gatekeeper responsibilities when he didn’t adequately investigate red flags of suspicious trading activity involving several corporate accounts.

To settle the case, he was fined $82,500 and ordered to pay $20,000 in costs.

Now, Leede has been sanctioned for its own oversight failures, namely not adequately questioning the red flags that the accounts’ activity generated.

Alongside the supervisory failures in that case, Leede admitted to two other violations.

Specifically, the firm didn’t address a weakness in its anti–money laundering policies that was first flagged by the Financial Transactions and Reports Analysis Centre (FINTRAC) in 2016, until 2022.

“Although Leede had procedures to assess and document risks of money laundering, its organizational risk assessment was deficient because it failed to assess Leede’s specific risks to money laundering and terrorist financing to the standard required by the [anti–money laundering laws],” the settlement with CIRO said.

Also, in 2017 the firm failed to enter trades on a marketplace that were required to be put through a market. “[I]n four instances shares were transferred from corporate accounts at Leede to unrelated third-party accounts at Leede,” the settlement said.

In addition to the monetary sanctions, the settlement noted that “Leede has taken steps to enhance its compliance program” to ensure that these kinds of violations don’t happen again.

The firm also fixed the FINTRAC failings, and CIRO noted there was no evidence that any money laundering or terrorist financing activity took place.