A Hearing Panel of the Investment Industry Regulatory Organization of Canada (IIROC) has imposed a fine of $150,000 against Questrade Inc. for advertising margin rates below the minimum prescribed by IIROC for foreign exchange accounts and failing to collect the required margin from clients.

The penalty decision, dated April 13, also requires Questrade to pay investigation and hearing costs totalling $50,000.

The decision follows a disciplinary hearing held in Toronto on April 28-30, 2009, in which an IIROC hearing panel found Questrade:

• advertised FX margin rates below the minimum prescribed by IIROC and its predecessor
Dealers Association of Canada (IDA), despite being advised by regulatory staff not to do so; and

• failed to obtain required margin from clients for FX despite being advised by regulatory staff to do so.

The panel’s decision and reasons associated with these activities was released Nov. 6, 2009. Questrade expressed its disappointment with the ruling, but said the firm would comply with the decision.

In its April 13, 2010 penalty decision, the panel said the size of the fine was appropriate given several factors including the firm’s co-operation with IIROC and its moves to comply with the November 6 decision. It also noted there was “no harm to individual clients.”

The IDA began its investigation on May 14, 2007 and the violations occurred between December 2006 and April 30, 2009.

IE