Vancouver-based invest- ment dealer Union Securities Ltd., with 325 employees and 20 branches across Canada and one in London, has a much different view of itself than do enforcement staff at the Investment Dealers Association of Canada.

“Since 1963, our motto has been integrity and service,” the firm proclaims on its Web site. “Although Union Securities is well known to our many clients, we have never devoted our efforts to self-promotion. Our clients have come to trust our service, rely on our honesty and depend on our integrity.”

IDA officials don’t quite see it that way. In July, they decided the firm was so wildly out of control, and so unresponsive to IDA attempts to get it back in line, that the IDA sought and obtained an order placing the firm under third-party supervision for 90 days. That term expired in October, but has now been extended to at least the end of the year.

Union was founded in 1963 by Norman Thompson Sr., who serves as its chairman. His three sons look after day-to-day operations. They are: Norm Thompson Jr., president and chief financial officer; John Thompson, CEO and chief compliance officer; and Rex Thompson, executive vice president.

Warren Funt, IDA vice president of member regulation in Western Canada, said in an affidavit the firm’s roots were trading and financing Vancouver and Alberta stock exchange issues. It moved to the virtually unregulated OTC Bulletin Board in the U.S. when the Vancouver Stock Exchange embarked upon a cleanup.

“Now the firm has diversified geographically and by business lines, but is still involved in high-risk business, be it TSX Venture, OTCBB, futures [or] short-selling, and has a disproportionate number of non-Canadian accounts,” Funt stated in his affidavit. He noted “higher-risk business requires stronger compliance systems.” But, he said, Union has a “culture of indifference toward compliance.”

Funt outlined a long series of regulatory audits that disclosed many compliance deficiencies. Union promised to fix the problems but didn’t. In this year’s review alone, he said, the IDA found 36 compliance problems, 14 of which were repeats from the previous review.

Funt didn’t attempt to hide his alarm. “The number of findings is a concern. But of greater concern is the repeat findings,” he said. “It is expected that when a firm is told to address a problem and accepts our position, it will do so.”

Union’s indifference to compliance has also attracted “brokers of questionable integrity,” Funt stated, noting that, of the 84 brokers hired in the two-year period ended June 2005, 19 have regulatory or criminal records.

Funt outlined a long list of regulatory actions taken against the firm, its brokers and clients by the VSE and its successor, the Canadian Venture Exchange; the U.S. Justice Department; the U.S. Securities and Exchange Commission; the B.C. Securities Commission; Market Regulation Services Inc. ; and the IDA. He says more is to come.

“There are currently seven active enforcement matters that name either Union or one of its registered representatives as the subject of the investigation,” he said in the affidavit. “I have come to the conclusion that there has been such a pervasive failure of its operating procedures and sales compliance system that Union cannot continue to operate in the same manner without risk of imminent harm to the public, other members [of the IDA] or the association. I do not believe senior management at Union will, of its own volition, make the changes necessary to achieve meaningful compliance.”

The IDA panel, headed by Vancouver lawyer Stephen Gill, agreed to appoint Grant Thornton LLP to monitor Union’s operations. But Union’s president, Norm Thompson Jr., appears unrepentant. He says Funt’s affidavit “has no basis,” but declines to provide specifics. IE