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by Mike Caswell

The Canadian Investment Regulatory Organization has fined Canaccord Genuity Corp. $475,000 for its failure to detect thousands of wash trades. Canaccord and a firm that it acquired allowed two clients to enter the trades over a four-year period, with the activity falling through a gap in Canaccord's monitoring tools. Even when the client trading generated internal alerts, Canaccord did not have any adequate explanation of the reviews it performed, CIRO says.

The fine for Canaccord is contained in a settlement agreement that CIRO released on Thursday, Dec. 28. In addition to the $475,000, Canaccord has agreed to pay $25,000 in CIRO's costs. The firm has further agreed that it will hire an expert to review its compliance policies with respect to the violations and will follow the recommendations of that expert.

The fine stems from violations with two clients going back to January, 2017. The activity began at Jitney Trade Inc. (a firm that Canaccord acquired on June 5, 2018) and continued until March, 2021, CIRO says. According to the settlement, the clients, only identified as clients "A" and "B," entered 14,484 and 1,364 trades that "involved no change in the beneficial or economic ownership" of shares.

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