On the heels of news that the Ontario Securities Commission is bringing an enforcement action against one of the primary manufacturers of asset-backed commercial paper, the Investment Industry Regulatory Organization of Canada is now bringing allegations of its own against a dealer.

The market for non-bank sponsored ABCP froze in August 2007. Now, regulators are starting to apportion some blame for the crisis. Yesterday, the OSC brought an enforcement case against a manufacturer of non-bank ABCP claiming that it didn’t live up to all of its disclosure obligations. Today, the IIROC announced a case of its own, claiming that a dealer fell short of its disclosure obligations, too.

The IIROC said that it will begin a hearing into allegations against Deutsche Bank Securities Ltd. on January 6, 2010.

The hearing concerns allegations that: between July 25 and August 13, 2007, the firm “failed to act fairly, honestly and/or in good faith to its clients by not disclosing the information relating to U.S. subprime and the liquidity risk in third-party asset-backed commercial paper to all of its clients who had invested or were interested in investing in third-party ABCP, while continuing to sell third-party ABCP to its clients.”

It also alleges that between March and August 2007, the firm “failed to ensure proper regulatory compliance oversight of third-party ABCP.”

None of the allegations in either case have been proven.

IE