A hearing panel of the Investment Dealers Association of Canada (IDA) has accepted a settlement agreement imposing penalties on Standard Securities Capital Corp., and Mark Marcello, an approved person with Standard.

As part of the settlement, Standard and Marcello admitted that Standard failed to implement adequate policies and procedures regarding maintaining evidence of daily and monthly supervisory reviews, failed to implement adequate policies and procedures to ensure compliance with OSC Policy 33-601 (grey and restricted list requirements), and failed to maintain evidence that it gave priority to orders for the accounts of customers over all other orders for the same security at the same price, including orders for employee accounts.

According to the IDA, between May 2002 and November 2004, Standard & Marcello failed to adequately supervise a client account. Between March 2003 and March 2006, they failed to adequately supervise or inform themselves relating to an employee’s outside business activities, and failed to adequately supervise and failing to learn and remain informed of essential facts relative to a client account operated by a Standard employee and in which the employee had a financial interest

Between July 2003 and February 2007, Standard and Marcello failed to adequately supervise and learn and remain informed of essential facts relative to two client accounts operated by a Standard employee and in which the employee had a financial interest.

Between May 2002 and April 2004, Marcello failed to use due diligence to learn the essential facts relative to a client and orders accepted on behalf of the client and to ensure that such orders were within the bounds of good business practice.

These matters were referred to Enforcement staff in 2005 following an IDA 2004 sales compliance review of Standard.

For its misconduct, Standard was fined of $162,500 and ordered to engage a compliance consultant to evaluate its compliance program and make recommendations if necessary to address any outstanding compliance issues.

Marcello was fined of $47,500 and suspended from acting as UDP for three months.

Standard was ordered to pay costs of $62,500 and Marcello must pay costs of $10,000.

In accepting the settlement agreement, the IDA panel noted that Standard had already been fined $80,000 by Market Regulation Services Inc. (RS) for certain events arising from the conduct of the same individuals that were responsible for the events that caused concern about the level of supervision in 2004 in this case.

The panel also noted that “the appointment of a compliance consultant is a failsafe measure to ensure that compliance problems at Standard have been cleaned up.”