Regulator's panel says RBC Dominion should have known trades were improper
The Canadian Investment Regulatory Organization panel that imposed a $1 million financial penalty on RBC Dominion Securities as part of a settlement, says the firm should have known its conduct was improper.
Last month CIRO’s hearing panel determined that RBC DS had engaged in trades of shares in Baytex Energy Corp. on behalf of Canadian investors on September 18, 2023. There were two trades, the purchase of the selling shares (the take on) and the ultimate sale to clients (the unwinding).
Both trades should have been entered on a marketplace in accordance with the rules (UMIR 6.4) unless there was an exception from CIRO. The firm did not seek an exception for the transactions to be off-market trades.
In its Reasons for Decision, the regulator noted that RBC DS had been fined $500 million in 2019 for a similar incident.
This was a factor in CIRO imposing the million dollar penalty this time because although relating to a single transaction rather than a series of misconduct “…the Respondent’s prior discipline experience should have made it aware that its execution of the BTE Trades was improper and in contravention of UMIR 6.4(1)” the regulator’s panel determined.
The firm did immediately file a Gatekeeper Report with CIRO acknowledging the improper trades as soon as it realized and has since reviewed its supervisory procedures to ensure that it can meet its regulatory compliance responsibilities.
“After a thorough review of the principles and factors by which we should be guided, and the facts of this case as reflected in the Settlement Agreement, we were, unanimously, of the view that this Settlement Agreement was reasonable and in the public interest and should be accepted by the Hearing Panel,” the CIRO panel stated.
