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by Mike Caswell

RBC Dominion Securities Inc. has agreed to pay $3.4-million to settle a case brought by the Canadian Investment Regulatory Organization over RBC's failure to supervise two employees behind high-risk futures trades. The employees included one in a Vancouver branch, Hongjia Liu, who inflicted $8.7-million in losses on clients according to CIRO. Mr. Liu, who entered well over 100 trades a day at times, generated $7.4-million in commissions, CIRO says.

The penalties for RBC are contained in a settlement agreement that CIRO released on Thursday, July 2. The $3.4-million includes a $1.5-million fine and disgorgement of $1.8-million in commissions. In addition, the firm must pay $100,000 in CIRO's costs. In settling the case, RBC has admitted to the violations.

The case arose from discretionary trades that Mr. Liu entered between June, 2017, and December, 2019. According to CIRO, Mr. Liu generated commissions that were more than double those of the next-highest-producing adviser during that period. The annual volume of trades, which peaked at 9,367 orders in 2018, should have made it apparent that Mr. Liu was not contacting clients ahead of each trade as required, CIRO said. At times, the trades were occurring within seconds or minutes of each other.

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