A hearing panel of the Investment Industry Regulatory Organization of Canada has fined Penson Financial Services Canada Inc. $225,000 for failing to maintain adequate internal controls, among other violations.
In the settlement agreement, Penson admitted that it failed to establish and maintain adequate internal controls, and that it failed to ensure employees understood their responsibilities to conduct certain reviews.
Specifically, Penson admitted that it failed to establish and/or maintain adequate internal controls related to certain accounts of Evergreen Capital Partners Inc.; and failed to establish appropriate controls and procedures to ensure the proper reporting of margin required on introducing brokers’ accounts;
Penson also admitted that it failed to ensure that each partner, director, officer, registered representative, employee and agent of the firm understood their responsibilities relating to the review of all introducing brokers’ inventory accounts and accumulation accounts.
The penalty against Penson includes a $225,000 fine and $20,000 in costs.
The violations occurred from March to October 2008. IIROC began its investigation into the firm’s conduct in November 2008.