The Investment Dealers Association is serving notice that it is no longer the weakest watchdog on the Street unveiling a sweeping case against Rampart Securities Inc.

The IDA has announced that it will hold a discipline hearing before the Ontario District Council on September 10, regarding the conduct of Rampart Securities and its executives Dominique Monardo, Barry Kasman, Nick Tsaconakos, and Henry Cole. The IDA alleges systemic failures as well as sales compliance and regulatory capital deficiencies at the firm.

The hearing will consider allegations that, between 1997 and 2001, Rampart engaged in conduct unbecoming and detrimental to the public interest through a general and systemic failure to design, establish, oversee and implement an effective compliance program.

The IDA says that, during this time, Rampart failed to comply with regulatory requirements concerning client and non-client trading; opening and supervision of account activity; suitability of client investments; and the conduct of its directors, officers and employees. In addition, there have been repeated incidents of regulatory-adjusted capital deficiencies.

In a statement to the media, Rampart Securities said “The allegations relate primarily to events that were typically of a technical nature and mostly occurred between two and four years ago. What is particularly disappointing is, that during the whole period Securities sought guidance from the IDA and worked closely with it.” The company said all allegations would be defended aggressively.

Rampart further stated: “All alleged capital deficiencies were either technical in nature or immediately remedied by infusions of capital from the parent company, Rampart mercantile.”

This is the kind of broad case that the IDA has historically been hesitant. to bring against one of its own members. After receiving heavy criticism form the provincial securities commissions for its lax enforcement activities, it is also the sort of case that may begin to redeem its reputation — signaling a new regime under Paul Bourque, senior vice president member regulation, and Alek Popovic, vice president enforcement.

In light of the notice of hearing, the IDA has also moved to designate Rampart Securities to be in discretionary Early Warning Level 2, which ensures that IDA staff will be able to provide appropriate investor protection for client assets and accounts.

“We want investors who have accounts with Rampart to know that we have taken steps to protect their investments and provide continued access to their accounts,” said Bourque. “These are serious allegations that require a full review and if established warrant a serious penalty.”