< Vic Alboini at his office on King St., TorontoFernando Morales/The Globe and Mail
Boutique investment firm Northern Securities Inc. has reached a settlement with regulators after confirming that it did business with insufficient capital, and without a chief financial officer to oversee operations. It has agreed to stop dealing with the public as a broker.
The Investment Industry Regulatory Organization of Canada (IIROC) said Wednesday said that in late 2012 and early 2013, Northern admitted to having "risk adjusted capital in an amount less than zero" for 38 of the 65 days in question.
During most of that that period it had no CFO.
The company's IIROC membership will be suspended and the company has removed its website from public access. Other requirements of the settlement include weekly reports to IIROC on its risk-adjusted capital levels, and keeping $100,000 of its assets intact until the end of June. It will then be allowed to distribute the funds to creditors.
This is yet another IIROC hurdle in the regulatory Olympics that Northern has been through over the past year.
In November, Northern chief executive officer Vic Alboini got in trouble with IIROC for improperly gaining access to credit for client Jaguar Financial Corp., putting Northern's own capital at risk.
Mr. Alboini was suspended for two years at that time, while being permanently banned from being the company's CEO. The company's chief compliance officer and chief financial officer were also penalized. Northern said it would appeal the decision to the Ontario Securities Commission.
The following month, IIROC said Northern must stop managing client money and transfer accounts elsewhere, leaving the firm only a few other business lines to operate on.
In this suspensions case, if Northern complies with the terms of its settlement then it may apply for a hearing to end its IIROC membership in six months time.
(Jacqueline Nelson is a Globe and Mail Financial Services Reporter.)
Return to Streetwise home page.