Laurentian Bank Securities fined $140,000 in leveraged ETF case

The company admitted that it failed to offer training to give its supervisors sufficient knowledge to adequately supervise the trading of leveraged ETFs in retail client accounts.

Specifically, Laurentian Bank Securities admitted that between October 2008 and April 2010, it failed to ensure that its supervisors fully understood the features and risks inherent in the leveraged ETFs in the accounts of two retail clients. In this capacity, the company failed to exercise adequate and effective supervision, IIROC said.

During the same period, Laurentian Bank Securities failed to use due diligence by neglecting to offer training to ensure that its supervisors had full knowledge to adequately supervise the trading of leveraged ETFs in its retail client accounts.

Under the settlement agreement, Laurentian Bank Securities has agreed pay a fine of $140,000 and costs of $10,000.

Tremblay, who was manager of the Montreal branch of Laurentian Bank Securities when the infractions occurred, also faces penalties.

In a separate settlement agreement released on Thursday, IIROC said Tremblay admitted that he neglected to take reasonable means to inform himself of the features and risks inherent in leveraged ETFs. He also neglected to ensure adequate supervision of the accounts of retail clients of a registered representative under his supervision, and neglected to ensure that the rep’s recommendations made to two clients, concerning leveraged ETFs, were appropriate for these clients.

Tremblay has agreed to pay a fine of $22,000 and costs of $3,000. He’s also banned for 12 months from applying for approval with IIROC in any capacity, and is required to pass the branch managers course before applying for approval as a supervisor of approved persons with IIROC.

Tremblay is no longer a registrant with an IIROC-regulated firm.