Introduction
Cormark Securities Inc. is a Canadian investment bank and capital markets corporation with its main office located in the city of Toronto in the province of Ontario. Cormark Securities Inc. was the subject of a Statement of Allegations that was released by the Investment Industry Regulatory Organization of Canada (IIROC) in October 2020. The claims of inappropriate conduct by Cormark Securities Inc. about the management of trades are laid out in detail in the Statement of Allegations. An in-depth review of the Statement of Allegations can be found below.
Background
Cormark Securities Inc. is not only a registered investment dealer in Ontario, British Columbia, Alberta, and Quebec, but it is also a member of the Investment Industry Regulatory Organization of Canada (IIROC).
The Investment Industry Regulatory Organization of Canada (IIROC) is the national self-regulatory agency that monitors all investment dealers in Canada as well as trading activities on debt and stock marketplaces. It is the responsibility of the Investment Industry Regulatory Organization of Canada (IIROC) to enforce the Investment Industry Regulatory Organization of Canada Rules (IIROC Rules), which define the expected levels of professionalism for investment dealers and their representatives operating in Canada.
The Claims Made in This Statement
The Statement of Allegations that was released by the IIROC against Cormark Securities Inc. alleges that the company participated in activity between November 2016 and March 2018 that violated numerous provisions of the IIROC Regulations. The Statement of Allegations was issued by the IIROC. The alleged misconduct pertains to the management of transactions involving the securities of an issuer located in Canada.
1.
to artificially inflate the trading volume and price of the securities of the Canadian issuer. This allegation is based on the fact that the scheme was designed to benefit Cormark Securities Inc. According to the allegations made by the IIROC, Cormark Securities Inc. acted as a facilitator for this scheme by purchasing and selling the securities of the Canadian issuer in a manner that had the effect of giving the impression that genuine trading activity was taking place. In addition, the IIROC asserts that Cormark Securities Inc. was aware, or ought to have been aware, that its actions violated the rules set forth by the IIROC.
2. The second accusation is that Cormark Securities Inc. participated in trading activities that either directly caused an artificial price for the securities of the Canadian issuer or indirectly contributed to the formation of that price. According to the allegations made by the IIROC, Cormark Securities Inc. took part in trading activity that was created to fraudulently drive up the price of the securities issued by the Canadian issuer.
The IIROC further alleges that Cormark Securities Inc. engaged in this conduct without having a legitimate purpose for the trading activity and that Cormark Securities Inc. knew or ought to have known that this conduct was contrary to the IIROC Rules. The IIROC further alleges that Cormark Securities Inc. engaged in this conduct without having a legitimate purpose for the trading activity.
3. The third complaint is that Cormark Securities Inc. did not appropriately supervise the trading activity that it conducted regarding the securities issued by the Canadian issuer. According to the allegations made by the IIROC, Cormark Securities Inc. did not have sufficient systems and controls in place to monitor and identify the allegedly unlawful trading activity.
The IIROC additionally alleges that Cormark Securities Inc. failed to take necessary steps to investigate and rectify the alleged unlawful trading conduct when it was recognized. This allegation is based on the fact that the alleged improper trading activity was discovered.
Analysis
Market Manipulation Cormark Securities Inc
The IIROC Rules consider any attempt to manipulate the market to be a significant infraction. The IIROC Rules prohibit any trading activity that is intended to create or has the effect of creating a false or misleading appearance of trading activity or a false or misleading appearance concerning the market for a security. Additionally, the IIROC Rules prohibit any trading activity that has the effect of creating a false or misleading appearance of the market for security. The integrity of the markets is compromised when there is market manipulation, which can also be detrimental to investors because it skews the prices of various assets.
Cormark Securities Inc. is accused of engaging in market manipulation based on the allegation that it participated in a scheme to artificially inflate the trading volume and price of the securities of the Canadian issuer. This allegation is based on the allegation that it engaged in market manipulation. This behavior, if it were to be established, would constitute an obvious violation of the IIROC Regulations. To comply with the IIROC Rules, investment dealers are required to conduct their business according to the greatest possible standards of integrity, fair dealing, and professionalism.
Producing or contributing to an artificial price by manipulation of market forces.
According to the allegations, Cormark Securities Inc. engaged in trading that had the effect of creating or contributing to an artificial price for the securities of the Canadian issuer. This constitutes a major violation of the IIROC Regulations.
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