Firm will also ensure employees involved go through a training program
RBC Dominion Securities, Inc. has agreed to a $1 million fine and other sanctions following an investigation by the Canadian Investment Regulatory Organization.
The regulator’s enforcement staff discovered that RBC DS had engaged in trades of shares in Baytex Energy Corp. on behalf of Canadian investors on September 18, 2023. Baytex is inter-listed on the TSX and NYSE.
There were two trades, the purchase of the selling shares (the take on) and the ultimate sale to clients (the unwinding).
Originally the acquisition of the shares was due to be executed by RBS DS and entered on a marketplace but it was subsequently agreed with shareholders that it would take place as a block trade by RBC Capital Markets LLC, a direct subsidiary of Royal Bank of Canada. RBC DS is an affiliate of RBC Capital Markets LLC.
The shares were transferred from RBC Capital Markets LLC to RBC DS for ultimate sale to ten clients.
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.
CIRO was first informed that the trades were not printed on a marketplace by several of its Dealer Members on September 20, 2023.
Over the next two days, RBC DS’s chief compliance officer compiled and submitted a Gatekeeper report indicating that it had not sought a regulatory exemption from CIRO prior to executing the BTE Trades.
Following a CIRO panel hearing on September 20, 2024, RBC DS and the regulator’s enforcement staff accepted a settlement agreement including the $1 million fine, $15,000 costs, and that the firm would deliver training to the individual employees involved in the trades to ensure full understanding of UMIR 6.4 requirements.
