(September 26 – 16:50 ET) – The Investment Dealers Association is investigating whether firms need to go further in knowing their clients.
The IDA says that the B.C. Securities Commission has asked it to review practices in the industry concerning when firms should determine the beneficial owners of corporate accounts. A “corporate veil sub-committee” has been set up to review the issue.
The concern comes out of the BCSC’s case against former Vancouver broker Jean-Claude Hauchecorne, who received a 20-year ban earlier this year for trading stocks for clients with connections to organized crime in the United States.
In its decision, the BCSC described Hauchecorne’s conduct as dishonest, saying he failed to meet his responsibility as a “gatekeeper” for the market by failing to live up to responsibilities under the Know Your Client rule.
The Canadian Venture Exchange also found that Hauchcorne breached the KYC rule by accepting orders from these shady clients. The CDNX permanently removed Hauchecorne’s right to act as a broker, fined him $200,000 and ordered him to give up $95,000 in commissions and pay the costs of the exchange hearing.
The IDA says it is consulting with the BCSC on this issue, “in order to clearly understand the concerns expressed by the commission”.
-IE Staff