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by Mike Caswell

The Investment Industry Regulatory Organization has fined former Scotia Capital Inc. employee Lee Harwood over off-book investments he facilitated without permission. IIROC said that Mr. Harwood put clients into a cannabis listing run by an acquaintance, doing so when Scotia Capital specifically prohibited such investments. He resigned amidst an investigation into his actions.

The sanctions for Mr. Harwood are contained in a settlement agreement that IIROC released on Thursday, April 27, in which Mr. Harwood has admitted to the violations. The regulator has fined him $40,000 and placed him under close supervision for six months. He must also rewrite the conduct and practices handbook examination and pay $5,000 in IIROC's costs.

The case arose from investments that Mr. Harwood facilitated in 2018, placing clients into an entity called Growforce Holdings Inc. (The company was private at the time, but later obtained a listing on the Canadian Securities Exchange.) At the time, Scotia Capital had not yet approved cannabis stocks, only allowing them through unsolicited transactions in non-managed accounts (clients placing orders on-line). The firm specifically restricted any participation in private placements or initial public offerings.

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