On October 29, 2015, a Hearing Panel of the Investment Industry Regulatory Organization of Canada (IIROC) accepted a Settlement Agreement, with sanctions, between IIROC staff and Industrial Alliance Securities Inc. (IAS inc.).
IAS Inc. admitted that it failed to take reasonable measures to ensure that two of its representatives, and some of its supervisors, possessed the required knowledge and understood the features and risks inherent in leveraged Exchange-Traded Funds, and failed to intervene in respect of one of its representatives to ensure that trades executed by the latter in the accounts of two clients were within the bounds of good business practice.
Specifically, IAS Inc. admitted to the following violations:
a) Between September 2007 and January 2010, IAS Inc. failed to take reasonable measures to ensure that two of its representatives, and some of its supervisors, possessed the required knowledge and understood the features and risks inherent in leveraged Exchange-Traded Funds (ETF), contrary to IIROC Rule 18.2b) and 18.3b) (IDA By-law 18 prior to June 1, 2008) and to Part III A sections 1 and 5 of IIROC Dealer Member Rule 2500 (IDA Policy 2 prior to June 2008); and
b) Between March 2009 and April 2011, IAS Inc. failed to intervene and to take the necessary measures in respect to one of its representative to ensure that the trades executed in the accounts of two clients were within the bounds of good business practice, contrary to IIROC Dealer Member Rule 1300.1(o) and IIROC Dealer Member Rule 2500.
Under the terms of the Settlement Agreement, IAS inc. accepted the following sanction:
a) A fine in the amount of $75,000.
IAS Inc. also agreed to pay IIROC costs in the amount of $15,000.
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