From the Regulators

Dealer sanctioned for failing to supervise Clarke and O’Reilly

By IE Staff |

The Investment Industry Regulatory Organization of Canada has imposed penalties totalling more than $400,000 on National Bank Financial Inc. and two of its reps for violating trading rules.

IIROC has accepted settlement agreements between IIROC staff and Paul Clarke, Todd O’Reilly and NBF.

In the agreements, Clarke and O’Reilly admit that they failed to transact business openly and fairly, and in accordance with just and equitable principles of trade, contrary to the Universal Market Integrity Rules.

Specifically, Clarke and O’Reilly each violated the rules by entering orders without identifying client accounts, holding the unallocated trades in a firm inventory account for up to 30 days, and later giving preferential treatment to clients by, on more than one occasion, allocating those securities to the account of a client who had not placed the original order.

Both individuals also violated the rules by causing audit trail violations by entering orders with repeated deficiencies such as failing to record client account numbers, order price and/or quantity.

The violations occurred between April 2006 and June 2007. During this period, Clarke was a registered representative and O’Reilly was an investment representative at NBF.

In a separate agreement, NBF admits to violating trading rules by failing to meet its trading supervision obligations with regard to Clarke and O’Reilly, and failing to record audit trail requirements.

In their settlements, Clarke has agreed to pay a $110,000 fine and $5,000 in costs, O’Reilly has agreed to pay a $15,000 fine and $2,500 in costs, and NBF has agreed to pay a $250,000 fine and $30,000 in costs.

IIROC began its formal investigation into Clarke’s conduct on June 17, 2008 and into O’Reilly’s conduct on June 24, 2008. Both men are currently registered with NBF.

IE