The firm agrees to pay $425,000 fine and $25,000 in costs for failing to prevent manipulative trading
The Canadian Investment Regulatory Organization (CIRO) has accepted a settlement agreement with Clarus Securities Inc, on September 25.
The firm admitted to failing in its responsibilities to supervise and monitor trading activities adequately in certain accounts and for not acting as a gatekeeper to prevent and detect manipulative and deceptive practices.
Between July 26, 2017, and April 30, 2018, Clarus did not ensure that client orders were free from potentially manipulative or deceptive methods.
The trading involved Liberty Health Sciences (LHS), a CSE-listed issuer. Clarus allowed pre-arranged trades between accounts controlled by AD, a key individual involved in the formation and financing of LHS and executed two intentional crosses that were potentially manipulative.
Despite knowing that AD had significant involvement in LHS and control over related accounts, Clarus failed to question the trading patterns or the purpose of these trades, which led to a misleading appearance of trading activity.
As a result of these breaches, Clarus agreed to pay a substantial fine of $425,000 and $25,000 in costs.
This settlement reflects the firm’s failure to meet the regulatory standards outlined in the Universal Market Integrity Rules (UMIR) 7.1 and related policies.
Clarus has no prior disciplinary history and has since updated its supervision processes. The settlement helps CIRO avoid the time and expense of a hearing, as Clarus acknowledged its shortcomings and cooperated with the process.
