A hearing panel of Investment Industry Regulatory Organization of Canada (IIROC) has fined Interactive Brokers Canada Inc. (IB Canada) for failing to report financial information correctly and keeping inadequate records.

The hearing panel accepted a settlement agreement between IIROC staff and IB Canada on June 22.

IIROC formally opened an enforcement case file concerning Interactive on June 17, 2008. The alleged violations occurred between 2002 and March 2009, while Interactive was a member firm of the Investment Dealers Association of Canada and of IIROC since June 1, 2008.

IB Canada admitted that it committed the following infractions, during the period from 2002 to 2009:

• it did not record properly in its inventory securities positions held in safekeeping by a regulated entity;

• It did not ensure that a brokerage account was opened with the regulated entity for the securities held in safekeeping for it by the latter, and failed to obtain sufficient proof of its control over these assets;

• It incorrectly reported to IIROC its customers’ free credit balances as funds held in trust with an acceptable institution, whereas the funds were invested in securities held in trust by its parent company, a regulated entity; and

• From October 2007 to January 2008, when the securities held in trust for IB Canada by its parent company were sold by the latter in its trust account in order to be held as funds there, Interactive incorrectly continued to describe these assets as eligible in its reports to IIROC and, consequently, it did not correctly calculate and report the amount of its risk adjusted capital to IIROC.

As penalty, the panel fined IB Canada $40,000 and ordered it to pay $10,000 in costs.

Montreal-based IB Canada is a member of the Interactive Brokers Group, a leading global electronic brokerage group. IB Canada provides its customers with direct, high-speed access to trade markets around the world.