Investment dealer Leede Jones Gable Inc. has been fined $150,000 for failing to “adequately supervise” stockbroker Larry Martin, who had previously admitted to facilitating unprofitable transactions involving millions of dollars’ worth of shares of companies linked to the Bridgemark Group consulting case.
The Canadian Investment Regulatory Organization (CIRO) released its reasons for the decision to fine Leede on Feb. 8 following a hearing on Jan. 12.
In the settlement agreement, the dealer admitted it failed to adequately address red flags associated with five corporate investment accounts handled by Martin.
“The corporate accounts generated red flags suggesting that they may have engaged in suspicious activity. Larry Martin admitted that he failed to fulfil his gatekeeper responsibilities by failing to make further investigation and review respecting the corporate accounts between April 2016 and October 2018,” the ruling stated.
On Nov. 5, 2021, Martin settled with CIRO (then the Investment Industry Regulatory Organization of Canada (IROC)) and agreed to pay a $50,000 penalty, $20,000 in costs to the regulator and $32,000 as disgorgement of commissions he earned.
Martin’s settlement stated red flags included accounts that had foreign jurisdictions associated with them; large amounts of shares were deposited into accounts and sold shortly thereafter; and “unprofitable” trading.
Trades were made with shares of Cryptobloc Technologies Corp., Abattis Bioceuticals Corp., Marapharm Ventures Inc., BLOK Techonologies Inc. and New Point Exploration Corp., according to the settlements.
In a November 2018 hearing notice, the B.C. Securities Commission listed those companies among 11 registered on the Canadian Securities Exchange as part of an alleged arrangement with consultants, dubbed the Bridgemark Group, who bought shares in exchange for consulting contracts, only to sell them quickly and often at a loss (to which the contracts more than covered).
The commission subsequently dropped most of its allegations against the consultants, save for four individuals who were issued insider trading charges in an amended hearing notice. Cryptobloc, Abbattis and Marapharm were also absolved of allegations; however, the commission subsequently found BLOK and New Point made misrepresentations to investors in 2018 with respect to private placements and consulting contracts.
The rulings against Leede and Martin anonymize the client accounts in question.
Martin’s settlement states he has worked in the securities industry as a registered representative (broker) since 1984 and was a supervisor from 2009 to 2021.
Martin is among a group of Vancouver brokers who face a hearing or have already been fined/suspended for facilitating transactions involving companies that have since been found to have made misrepresentations.
The regulator also found Leede, which is headquartered in Calgary with Vancouver offices, failed to have adequate policies to ensure compliance with the requirements under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act and its associated regulations.