(December 4 – 15:40 ET) – – The Quebec District Council of the Investment Dealers Association of Canada has imposed discipline penalties on Rothenberg Capital Management Inc.

Rothenberg Capital admitted having failed to establish and maintain adequate internal controls and having failed to establish and maintain a proper system of books and records during 1998.

As well, Rothenberg Capital failed to ensure that designated persons properly supervise the financial operations of the firm.

The firm was fined $20,000 and as a condition of continued membership, it will not make any inter-companies transfers unless a duly legal right to set-off as per Chapter 3860 of CICA Handbook expressly permits it. Rothenberg Capital must pay $5,000 towards the IDA’s investigation costs.

In determining the appropriateness of the penalties, the IDA considered that since the violations occurred in 1998, the Rothenberg Capital has taken steps to correct the identified failures and reduce the risk of a recurrence. Also, because Rothenberg Capital was a Type 1 introducing broker, there was no risk to public investors as a result of the violations.

According to the IDA, the Monthly Financial Report filed by the company for the month-ended, Feb. 28, 1998, disclosed an incorrect calculation of financial information due to netting of inter-companies accounts receivable against inter-companies payable, therefore underestimating the non-allowable assets.

On two separate occasions, in April and June 1998, Rothenberg Capital contravened regulatory requirements as a result of an inappropriate cash transfer to another company and failed to adequately monitor applicable financial rules. The amounts were transferred back upon request by IDA staff.

An on-site review of the records of Rothenberg Capital by IDA staff on Dec. 4, 1998, disclosed that as of Dec.3, 1998, the company reported inaccurate financial information as a result of an improper accounting of advances made to other companies during the first week of December 1998 and from an over-assessment of commissions revenues for the relative period.
-IE Staff