The Investment Industry Regulatory Organization of Canada has imposed penalties totalling $100,000 against National Bank Direct Brokerage Inc. for failing to provide supervision regarding one of its registered employees, and failing to maintain proper records.

NBDB admitted that it failed to provide supervision and establish and maintain adequate internal controls when it allowed its representative Thi Sen Chher:

> to obtain a proxy for the brokerage accounts of a member of his family, without registering these accounts as Pro accounts or ensuring that they were registered as such;

> to make additions, without supervision or verification, to that client’s mailing address and investment profile without their authorization; and

> to self-approve transfers of funds, without supervision or verification, between his personal accounts and those of that client, a member of his family, without the client’s consent or approval.

The firm also admitted that it failed to maintain proper records and continued the registration of its chief compliance officer with the regulatory authorities although this person was no longer employed with NBDB.

NBDB agreed to a $75,000 fine, and to pay $25,000 in costs.

The violations occurred between November 2002 and May 2007.

IIROC (then Investment Dealers Association of Canada) began its formal investigation into NBDB’s conduct on October 24, after the firm reported the situation to the IDA.

IE