The Investment Industry Regulatory Organization of Canada (IIROC) is bringing allegations against Northern Securities Inc. (NSI) charging that it has been operating with a capital deficiency over the past couple of months.

IIROC announced Thursday it will hold a hearing on February 7 to set a date for a disciplinary hearing to consider allegations that, from late 2012 into early 2013, NSI carried on its operations without sufficient capital and without a chief financial officer to ensure regulatory compliance. The allegations have not been proven.

It charges that between Nov. 21, 2012, and January 25, Northern had risk adjusted capital of less than zero on 38 days; and that it failed to have adequate internal controls as it didn’t have a CFO for some of that time.

Wendesday night, NSI’s parent, Northern Financial Corp. (TSXV:NFC), said has received the notice from IIROC. It said that NSI will be preparing a response to the notice that will be provided to IIROC.

Earlier this month, NFC announced that a proposed financing had failed, leaving NSI short of capital. It had sought to raise $500,000 in a common share financing. The firm has also had its business curtailed, as it was forced to hand off its retail and institutional accounts to other firms after its former carrying broker decided to discontinue its business, and the firm was unable to obtain a new carrying broker. At the time, NFC admitted that NSI was not in compliance with its capital requirements.