IIROC hearing to consider Octagon Capital suspension

On Nov. 27, Octagon advised that its CFO “was unable to return to work and was being removed from Octagon’s accounts, email, and payroll systems”, the IIROC notices says, so the firm now does not have a qualified CFO. In addition, the firm has terminated all of its employees and is not engaged in any trading.

“Allowing Octagon to continue operating as an IIROC [dealer] creates a risk of imminent harm to the public, the IIROC membership, and IIROC itself, because Octagon continues to hold itself out as a member of IIROC even though it is not in compliance with IIROC’s minimum capital requirements or and does not have an active qualified CFO,” the IIROC notice says.

The firm “is in such financial or operating difficulty” that it cannot be permitted to continue to operate without risk of imminent harm to the public, other dealers or the SRO, the notice adds.

At the hearing, IIROC staff will be seeking an order that Octagon be suspended, that it immediately cease dealing with the public, and that the company preserves its books and records, among other conditions.

According to the IIROC notice, as of Nov. 27, there is an apparent shortfall of approximately $4.7 million between the client assets reported on the accounting system of Octagon’s carrying broker (Fidelity) and the funds available in the firm’s accounts.

IIROC’s primary focus at this point is “to ensure an orderly wind down of the firm and the protection of clients assets, which are currently held by Fidelity,” the IIROC notice says. More information about the regulator’s plan to protect client assets will be disclosed at the hearing on Dec. 3, the IRROC notice adds.