Toronto-based Northern Securities Inc. is winding up its operations, and has agreed with the Investment Industry Regulatory Organization of Canada (IIROC) to be suspended in light of its capital shortfall.
IIROC reports that a hearing panel has accepted a settlement agreement between IIROC staff and Northern Securities that, among other things, will see the firm suspended immediately.
The settlement indicates that Northern does not intend to continue its operations, that it has reduced its staff to five employees, and expects those remaining employees to transfer out of the firm shortly.
As part of the settlement, Northern admitted that, from late 2012 into early 2013, it carried on its operations without sufficient capital and without a chief financial officer to ensure regulatory compliance. It notes that the capital deficiency was $809,000, as of Feb. 28, and that the firm does not anticipate any new revenue.
“Without sufficient risk adjusted capital, Northern is at risk of defaulting on its financial obligations and being unable to carry on normal business operations,” it says.
During the suspension, the firm will report to IIROC on its risk-adjusted capital position on a weekly basis, and it’s prevented for reducing its capital or repaying any debts without IIROC consent. The firm also agrees to cease dealing with the public, and to remove its website from public access.
Additionally, Northern will preserve $100,000 of its remaining assets until June 30, when it will be authorized to disburse those funds to its creditors, including any former clients with a valid claim against the firm. After six months, if there are no developments that would make the termination of its membership contrary to the interests of its clients, then either IIROC staff or Northern will be free to apply to a hearing panel to terminate Northern’s membership with IIROC.
Northern Securities is a subsidiary of Toronto-based Northern Financial Corp. (TSX:NFC)