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by Mike Caswell

The Canadian Investment Regulatory Organization has imposed $2-million in sanctions against Toronto's Independent Trading Group Inc., or ITG, for gatekeeping failures with respect to over-the-counter trading. Among other things, ITG allowed a foreign entities to unload $341.9-million worth of securities and wire most of the money to offshore jurisdictions, CIRO says. Some of the sales occurred in stocks that had been flagged for suspicious promotional activity, according to CIRO.

The penalties for ITG are contained in a settlement agreement that CIRO released on Monday, May 4. The $2-million includes disgorgement of $1.5-million plus a $500,000 fine. In addition, ITG has agreed to pay $50,000 in CIRO's costs. In agreeing to pay the sanctions, ITG has admitted to the violations.

The case arises in part from a client called Seven Mile Securities Inc. that opened accounts in June, 2020. Seven Mile, which was registered in the Cayman Islands, deposited large amounts of shares in OTC securities into its accounts and sold them, often immediately, according to CIRO. Over a period of about 1-1/2 years, its total selling amounted to $160.2-million while the total buying amounted to $4.1-million, CIRO says.

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