A hearing panel of the Investment Dealers Association of Canada appointed has fined Timber Hill Canada Co. $40,000 for failing to maintain enough risk adjusted capital, and filing inaccurate financial information.
Following a settlement hearing held on Dec. 2, 2004, the panel reviewed and accepted a settlement agreement negotiated between Timber Hill and IDA.
Pursuant to the settlement agreement, Timber Hill admitted that:
- during the period from September 2002 to November 2002, it failed to ensure that its risk adjusted capital was calculated in accordance with the IDA rules, and consequently reported inaccurate financial information in its monthly financial reports;
- on Oct. 31, 2002, it failed to maintain its risk adjusted capital at a level greater than zero, and was capital deficient by $2,058,000;
- During the period from Jan. 20, 2003 to June 27, 2003, while designated in the Early Warning System, it paid $17,000 in bonuses to its officers while restricted from doing so by the IDA; and failed to comply in a timely manner to the IDA’s request of being provided with evidence of risk management policies implemented and maintained by Timber Hill.
In addition to the fine, the panel ordered Timber Hill to pay $3,500 in IDA costs.
The IDA note the violations did not put any clients at risk because Timber Hill does not have a retail business, but trades only its own inventory. Timber Hill has rectified its capital position and remains in good standing with the association.