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by Mike Caswell

The Investment Industry Regulatory Organization of Canada has imposed $156,000 in sanctions and a permanent ban on Douglas Steer, a former Canaccord Genuity Corp. broker, for conduct "so egregious and outrageous that it demands unqualified denunciation." IIROC found that he facilitated the sale of $15-million worth of shares in a controversial OTC Bulletin Board company, Spongetech Delivery Systems Inc. He sold the stock and wired the proceeds overseas in transactions that "reeked of impropriety and illegality."

The penalties, announced by IIROC on Thursday, March 5, stem from Mr. Steer's 2009 sales of Spongetech, a company that purportedly made preloaded soap sponges. IIROC said that over a four-month period that year, Mr. Steer accepted delivery of 194 million shares into accounts that were in the names of Panamanian companies. The companies were controlled by people he understood to live in Europe, but he knew little about them. Almost immediately after the stock was deposited, Mr. Steer sold it into the market for proceeds of $15-million, IIROC said. Within days of the sales, he wired the money to banks in Switzerland, Liechtenstein or Hungary.

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