TORONTO, Dec. 20, 2013 /CNW/ - The decision of a Hearing Panel of the Investment Industry Regulatory Organization of Canada (IIROC), in the matter of Northern Securities Inc. ("NSI"), Victor Alboini, Douglas Chornoboy and Frederick Vance [collectively the "Respondents"] dated November 10, 2012 was reviewed by the Ontario Securities Commission (the "OSC") on February 14, 15 and 20, 2013.
The OSC released its decision on December 19, 2013, and upheld the IIROC Hearing Panel's decision that the Respondents committed the following contraventions:
Count 1: Between August and November 2008, Mr. Alboini, as Ultimate Designated Person and a Registered Representative at NSI, engaged in a trading practice which improperly obtained access to credit for his client, Jaguar Financial Corporation, and in doing so risked the capital of both NSI and its carrying broker, thereby engaging in conduct unbecoming or detrimental to the public interest, contrary to IIROC Dealer Member Rule 29.1;
Count 2: Between August and November 2008, Mr. Vance, as Chief Compliance Officer, failed to adequately supervise Mr. Alboini's trading activity involving Jaguar Financial Corporation and other NSI clients, contrary to IIROC Dealer Member Rules 1300.1, 1300.2 and 2500; and
Count 5(a): NSI, Mr. Alboini, as Ultimate Designated Person, and Mr. Chornoboy, as Chief Financial Officer from February 2008 to February 2009, filed or permitted to be filed inaccurate monthly financial reports which failed to account for leasehold improvement costs, thereby misstating NSI's risk adjusted capital, contrary to IDA By law 17.2 and IIROC Dealer Member Rule 17.2.
In addition, the OSC found that the IIROC Hearing Panel made an error in law with respect to its decision on Count 3, which reads as follows:
From 2006 to 2010, NSI, Mr. Alboini, as Ultimate Designated Person, and Mr. Vance, as Chief Compliance Officer, repeatedly failed to ensure that NSI corrected deficiencies found in three business conduct compliance reviews and one trading conduct review, thereby engaging in conduct unbecoming or detrimental to the public interest, contrary to IDA By law 29.1 and IIROC Dealer Member Rule 29.1.
The OSC set aside the decision on Count 3 and referred the matter back to IIROC for disposition. IIROC has until February 14, 2014 to decide whether Count 3 shall be re-heard in a trial de novo before a different IIROC Hearing Panel, failing which Count 3 shall be dismissed.
On the issue of penalty, the OSC found that the IIROC Hearing Panel's decision to conduct a penalty hearing before releasing reasons for its decision on the merits was procedurally unfair to the Respondents and constituted an error in law. Accordingly, The OSC set aside the sanctions and costs imposed on the respondent by the IIROC Hearing Panel. On a date to be determined, the OSC will hold a hearing de novo solely on the question of the appropriate sanctions and costs to be imposed on the Respondents for the Count 1, 2 and 5(a) contraventions.
The OSC decision dated December 19, 2013 is available at:
The IIROC Hearing Panel's decision dated November 10, 2012, is available at:
Documents related to ongoing IIROC enforcement proceedings - including Reasons and Decisions of Hearing Panels - are posted on the IIROC website as they become available. Click here to search and access all IIROC enforcement documents.
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IIROC is the national self-regulatory organization which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada. Created in 2008 through the consolidation of the Investment Dealers Association of Canada and Market Regulation Services Inc., IIROC sets high quality regulatory and investment industry standards, protects investors and strengthens market integrity while maintaining efficient and competitive capital markets.
IIROC carries out its regulatory responsibilities through setting and enforcing rules regarding the proficiency, business and financial conduct of dealer firms and their registered employees and through setting and enforcing market integrity rules regarding trading activity on Canadian equity marketplaces.
IIROC investigates possible misconduct by its member firms and/or individual registrants. It can bring disciplinary proceedings which may result in penalties including fines, suspensions, permanent bars, expulsion from membership, or termination of rights and privileges for individuals and firms.
All information about disciplinary proceedings relating to current and former member firms is available in the Enforcement section of the IIROC website. Background information regarding the qualifications and disciplinary history, if any, of advisors currently employed by IIROC-regulated firms is available free of charge through the IIROC AdvisorReport service. Information on how to make investment dealer, advisor or marketplace-related complaints is available by calling 1.877.442.4322.
SOURCE: Investment Industry Regulatory Organization of Canada (IIROC) - General News
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