The Ontario Securities Commission will hold a hearing to review a decision of an Investment Industry Regulatory Organization of Canada hearing panel that found an investment dealer didn’t fail in its supervisory duties, even though its employees were found to have repeatedly breached the trading rules.
The OSC said Thursday it will hold a hearing on December 12 and 13 to consider an application from IIROC staff to review the hearing panel’s decision, which was handed down on Nov. 30, 2010.
In its decision, the hearing panel found that five employees at TD Securities Inc. violated trading rules by entering artificial closing bids in 322 instances over a six-month period. However, the panel dismissed an allegation that TD Securities failed to comply with its trading supervision obligations.
In an application to the OSC, IIROC staff argue that the hearing panel erred in law in dismissing the allegation against TD Securities on the basis that:
- the firm’s compliance monitoring system contained a fundamental flaw;
- the panel erred in deciding that a mistaken understanding of the rules by TDSI excuses a failure to comply with its supervisory obligations;
- the panel overlooked material evidence;
- and the panel erred and misapprehended the evidence in considering a trading analysis prepared by TDSI, its employees and an expert retained by the firm.
IIROC staff seek an order setting aside the decision of the panel regarding the allegation against TD Securities, and a finding that the firm failed to comply with its trading supervision obligations as IIROC contends.