TORONTO — The U.S. Securities and Exchange Commission says Canadian broker-dealers Cormark Securities Inc. and ITG Canada Corp. have agreed to pay a total of US$1 million to settle charges of improper trading procedures.
According to the regulator, the two firms provided incorrect order-marking information in a period from August 2016 through October 2017 that caused more than 200 sale orders from a single hedge fund, representing total sales of more than US$660 million, to be mismarked as "long" in violation of SEC regulations.
By definition, “long” means the seller actually owns the stock they are selling, as opposed to a “short” if the seller is borrowing stock to sell.
The SEC says that because the hedge fund's sale orders were, in fact, short sales, the incorrect order-marking caused the executing broker to violate regulations by failing to borrow or locate the shares prior to effecting those short sales.
It says that Cormark and ITG Canada, without admitting or denying the findings, have each agreed to stop current and future similar violations.
In addition, it says Cormark has agreed to pay a penalty of US$800,000, and ITG Canada has agreed to pay a penalty of US$200,000.
This report by The Canadian Press was first published Dec. 23, 2020.
The Canadian Press