A Market Regulation Services Inc. hearing panel today fined two trading supervisors at Dundee Securities Corp. $15,000 each for failing to fully comply with their trading supervision obligations.

The RS panel approved a settlement agreement between Mark Ellis and Keith Leslie Leonard and RS. In addition to the fine, both men must also pay $6,000 in costs.

On Sept. 17, 2003 a person in training to become a trader at Dundee entered non-client market orders on both sides of the market during the pre- opening of the TSX. When the person was advised by RS market surveillance officers that he should “cease and desist” this potentially manipulative and deceptive method of trading, he promptly cancelled this and other similarly improper orders entered that morning, all of which were designed to circumvent the application of the TSX trading mechanism that allocates which orders will receive a complete fill at the opening.

The trainee immediately advised Ellis and Leonard that he had been contacted by RS. Ellis and Leonard warned him not to engage in such conduct again as it was improper and that if he did, there would be serious ramifications. After receiving this warning from Ellis and Leonard, he did not engage in this manner of trading again.

Ellis and Leonard concluded this was a training issue and did not conduct any further investigation. Nor did they escalate this matter to the manager of institutional sales and trading, or to the compliance department at Dundee as required by Dundee’s policies.

Consequently, there was no to see whether any other Dundee trainees or traders were also engaging in similar conduct. Nor were any steps taken to address the conduct from a firm-wide perspective.

However, another trainee at Dundee engaged in a similar but more blatant pattern of order entry in the pre-opening of the TSX for 52 days between July 2003 and December 2003.

As well, Ricardo Mashregi, a Dundee registered trader with six years seniority, also managed to engage in this type of pre-opening activity for 248 days between October 2003 and February 2005.

On Oct. 14, 2005, Mashregi was fined a total of $60,000 by RS.

“Persons with supervisory responsibilities must fully and properly supervise all employees under their supervision to ensure their compliance with the rules,” said Maureen Jensen, vp, market regulation, eastern region, in a release. “Ellis and Leonard failed to fully comply with their obligations as trading supervisors and failed to escalate the matter in question as required under Dundee’s policies and procedures.”