(June 29) – Canaccord Capital Corp., Investment Executive’s top brokerage firm this year, has agreed to pay $428,000 in penalties and investigative costs to the B.C. Securities Commission for its role in a stock fraud perpetrated by Gary Stanhiser and his Excel group of companies.
The BCSC levied a $100,000 penalty on Stanhiser in March and banned him from the B.C. securities market for the rest of his life. A former pastor with the Seventh Day Adventist Church, Stanhiser bilked more than $11 million from 300 investors. Many of the investors were church members in B.C. and California. Canaccord was home to a number of accounts controlled by Stanhiser that he used to pool investors’ money, later using that money to buy into offshore trusts and other companies he controlled.
Canaccord had 140 clients who invested in Stanhiser’s scheme. Canaccord officials say the company did not knowingly participate in Stanhiser’s scheme, but they agree that the company failed to properly supervise its employees and did not question the nature and type of transactions being made by Stanhiser and the Excel companies.
In an agreement with the BCSC, Canaccord says it has improved its compliance procedures but the BCSC has imposed an audit on Canaccord’s compliance record for the fiscal year 1999-2000. Canaccord will pay all costs associated with the audit and also agrees to fix any deficiencies discovered by the audit.
“The onus is on senior management to ensure their companies and employees comply with securities regulations,” said Stephen Wilson, BCSC executive director.”This incident shows that an investment firm without an adequate compliance program is vulnerable to fraud, manipulation and an abuse of client trust.”
-IE Staff