SEC fines Canaccord Genuity over violations of gatekeeping provisions
Without admitting or denying the SEC’s findings, Canaccord consented to a censure and a $250,000 penalty.
The United States Securities and Exchange Commission (SEC) today unveiled charges against Canaccord Genuity LLC, a broker-dealer headquartered in New York City. The regulator alleges that the company enabled trading in dozens of thinly-traded securities without conducting the review required by the federal securities laws.
According to the SEC’s order, Canaccord published quotes and made markets in dozens of over-the-counter (OTC) securities without performing the review required by Exchange Act Rule 15c2-11, which requires that broker-dealers have a reasonable basis for believing the prospectus and other information made available by the issuer of the securities was accurate.
The order finds that Canaccord delegated to a compliance associate the responsibility to obtain and review the information required by Rule 15c2-11 and to fill out and sign the necessary forms demonstrating compliance with the rule. The compliance associate had no trading experience and no formal training on conducting the requisite review, such as training related to the analysis of financial statements and other information.
As a result of the deficient review performed by the compliance associate, Canaccord allowed dozens of OTC securities to be traded in U.S. markets without conducting the review required to protect investors. Canaccord has since revised and improved its policies and procedures with respect to Rule 15c2-11.
Without admitting or denying the SEC’s findings, Canaccord agreed to the institution of proceedings ordering that it cease and desist from committing or causing any violations and any future violations of Section 15(c)(2) of the Exchange Act and Rule 15c2-11, imposing a censure and ordering that it pay a $250,000 penalty.