The Investment Industry Regulatory Organization of Canada (IIROC) has fined Montreal-based CTI Capital Securities Inc. $25,000 for failing to use due diligence in accepting orders in the accounts of one of its investment advisors.
On April 28, an IIROC panel accepted a settlement agreement, with sanctions, between IIROC staff and the firm.
CTI Capital admitted that, between September 2010 and December 2011, it failed to use due diligence to ensure that the acceptance of orders in the account of Milad Nassif, an investment advisor, and in those of his wife and son, was within the bounds of good business practice.
According to the settlement, Nassif effected numerous trades in the accounts he handled, namely his own margin account, the margin and RRSP accounts of his spouse and the margin account of his son, which were all PRO accounts.
The accounts did not have sufficient funds or margins to cover the trades and no effort was made to ensure adequate settlement of these trades, thus Nassisf was engaging in the practice commonly known as “free-riding”, IIROC says.
The IIROC panel found that CTI Capital: didn’t intervene adequately to rectify the margin calls issued against Nassif; didn’t intervene adequately with regard to the free-riding trades; and didn’t intervene adequately regarding the trades that Nassif effected in the PRO RRSP accounts, notably tolerating the PRO RRSP accounts being placed in a debit position.
As part of the settlement, CTI Capital agreed to pay a $25,000 fine and $5,000 in costs.
Nassif left his job with CTI in October 2013 and is no longer employed with any IIROC-regulated firm.