Market Regulation Services Inc.

Market Regulation Services Inc.

October 19, 2005 13:45 ET

Market Regulation Services Inc.: Mark Ellis and Keith Leslie Leonard of Dundee Securities Corp. fined C$42,000 for Improper Supervision of Trading

TORONTO, ONTARIO--(CCNMatthews - Oct. 19, 2005) - Mark Ellis and Keith Leslie Leonard, both trading supervisors at Dundee Securities Corp., today were each fined C$15,000 plus C$6,000 in costs after an RS Hearing Panel approved a settlement agreement between the two men and RS in which they agreed that they failed to fully comply with their trading supervision obligations, contrary to s. 7.1(4) of the Universal Market Integrity Rules.

On September 17, 2003 a person in training to become a trader at Dundee entered non-client market orders on both sides of the market during the pre-opening of the TSX. When the person was advised by RS market surveillance officers that he should "cease and desist" this potentially manipulative and deceptive method of trading, he promptly cancelled this and other similarly improper orders entered that morning, all of which were designed to circumvent the application of the TSX trading mechanism that allocates which orders will receive a complete fill at the opening.

The person in training immediately advised Ellis and Leonard that he had been contacted by RS and the substance of the discussions. Ellis and Leonard warned him not to engage in such conduct again as it was improper and that if he did, there would be serious ramifications. After receiving this warning from Ellis and Leonard, he did not engage in this manner of trading again.

Ellis and Leonard concluded this was a training issue and did not conduct any further investigation. Nor did they escalate this matter to Peter Ellis, Senior Vice-President, Manager, Institutional Sales and Trading or to the Compliance Department at Dundee as required by Dundee's policies and procedures.

Consequently, there were no enquiries made or investigations conducted by Dundee to see whether any other trainees or traders were also engaging in such conduct. Nor were any steps taken to address the conduct from a firm-wide perspective, such as a compliance department directive.

However, another trainee at Dundee was able to engage unfettered in a similar but more blatant pattern of order entry in the pre-opening of the TSX for 52 days between July 2003 and December 2003.

Ricardo Mashregi, a Dundee registered trader with six years seniority, also managed to engage unfettered in this type of pre-opening activity for 248 days between October 2003 and February 2005. On October 14, 2005, Mashregi was fined a total of C$60,000 after an RS Hearing Panel approved a settlement agreement between Mashregi and RS for his trading conduct, which was contrary to just and equitable principles of trade.

This trading was harmful to the integrity of the TSX.

"Persons with supervisory responsibilities must fully and properly supervise all employees under their supervision to ensure their compliance with the rules," said Maureen Jensen, Vice President, Market Regulation, Eastern Region. "Ellis and Leonard failed to fully comply with their obligations as trading supervisors and failed to escalate the matter in question as required under Dundee's policies and procedures."

About Market Regulation Services Inc. (RS)

RS is the independent regulation services provider for Canadian equity marketplaces, including TSX, TSX Venture Exchange, Canadian Trading and Quotation System, Bloomberg Tradebook Canada Company, Liquidnet Canada Inc. and Markets Securities Inc. RS is recognized by the securities commissions of Ontario, British Columbia, Alberta and Manitoba and by the Autorite des marches financiers in Quebec to regulate the trading of securities on these marketplaces by participant firms and their trading and sales staff. RS helps protect investors and ensure market integrity by ensuring all equities transactions are executed properly, fairly and in compliance with trading rules.

Contact Information

  • Market Regulation Services Inc.
    Doug Maybee
    Director of Communications & Public Affairs
    (416) 646-7253 or (416) 627-3900 (Cell)