The Canadian Investment Regulatory Organization says it has accepted a settlement with sanctions against Canaccord Genuity Corp. related to trading supervision.
The regulator said the Canaccord Genuity Group Inc. subsidiary admitted that, from January 2017 to March 2021, it failed to comply with its risk management and controls obligations as they related to market access by some of its direct electronic access clients.
It said that, as part of the agreement, Canaccord has agreed to a fine of $475,000 and to pay costs of $25,000.
According to the settlement agreement, the compliance failure was related to two clients who carried out over 10,000 trades that apparently involved no change in the economic ownership.
Known as “wash trades,” such buying and selling of a security with no real change of beneficial ownership can be used to mislead investors about the trading volume and interest in a security.
The two clients were clients of Jitneytrade, which Canaccord acquired in 2018 “thus assuming any regulatory liability arising from Jitney’s failure to comply with its regulatory obligations,” the settlement agreement said.
While tools were in place to monitor wash trades, they were insufficient. Jitney had previously been fined for similar failures, the settlement agreement said.
Canaccord said it cooperated fully in the investigation, which it is pleased to have resolved, and has adopted significant improvement to its trade surveillance capabilities.