The Investment Industry Regulatory Organization of Canada (IIROC) and Toronto-based Mackie Research Capital Corp. have come to a settlement agreement in which Mackie has agreed to pay a fine of $130,000 and costs in the sum of $20,000 to IIROC, the self-regulatory organization announced on Tuesday.

The reasons for the settlement include: Mackie did not disclose a conflict of interest on the part of a Mackie employee; the firm did not report certain information in an accurate or timely way through the National Registration Database (NRD); and Mackie did not properly supervise the activities of a Mackie investment advisor.

The first rule contravention occurred between July 1, 2012 and Jan. 15, 2013, when Mackie recommended and accepted orders for investments in certain products without informing clients that Mackie advisor Kurt Soost held a financial interest in those particular products. Mackie did not communicate this fact to those investors until the firm sent a letter to them dated May 24, 2013.

IIROC also found that Mackie failed to report certain “material” information in its NRD filings for approximately a year prior to September 2013. This included the accurate number of outside business activities for Soost in an initial filing in October 2012 (that was later corrected in February 2013) as well as the accurate number of hours dedicated to an outside business activity by a separate registered trader.

“Had the foregoing information been properly recorded, [IIROC enforcement] staff would have had an opportunity to address any possible concerns about those activities in a timely manner,” states IIROC in the settlement agreement.
In addition, the firm was also found to not have fully and properly supervised the activities of Harry Richard Newman, a registered representative who was employed with Mackie. Newman was declared to have engaged in excessive trading in one client’s account between June 2007 and April 2010. He earned approximately $900,000 in commissions from that client’s account alone.

“Over the [almost] three year period, Mackie had opportunities to stop Newman’s conduct and prevent this excessive amount of commissions from being charged to the client. It failed to do so,” states IIROC in the settlement agreement.