Market Regulation Services Inc.

Market Regulation Services Inc.

February 26, 2007 16:20 ET

Scotia Capital Agrees to Settlement with Market Regulation Services Inc.

TORONTO, ONTARIO--(CCNMatthews - Feb. 26, 2007) - A Hearing Panel in Toronto today approved a settlement agreement between Market Regulation Services Inc. (RS) and Scotia Capital Inc. In the settlement, Scotia Capital agrees that, it is liable under UMIR Rule 10.3(1) for contraventions by its former employees of UMIR 7.7(5) (pre-May 2005 version) and UMIR 6.4, occurring between April 4, 2002, and October 14, 2003.

During the period April 4, 2002 to April 18, 2005, David Berry, then Head of Preferred Trading at Scotia Capital and his assistant on the Preferred Desk, Marc McQuillen, operated outside of the normal syndication practices in relation to new issues for which Scotia was a member of the underwriting syndicate. They solicited client buy orders from their clients during the distribution period at the distribution price. Then, on or about the first day of trading, they conducted off-marketplace trades in the newly listed shares by selling them to clients, largely from a short position, from their inventory account. These short positions were subsequently covered in the market, usually at a profit. Scotia Capital was fined $571,167.00 representing the financial benefit to it from the conduct described in the Statement of Allegations, plus $67,000 in costs.

"We are pleased that Scotia Capital recognized in this settlement that, even though supervision was not an issue, it would not be appropriate to retain profits generated by the wrongdoing of its employees," said Maureen Jensen, Vice-President Market Regulation, Eastern Region.

Details of the settlement can be found on RS's website at www.rs.ca.

About Market Regulation Services Inc. (RS)

Market Regulation Services Inc. ("RS") is the regulation services provider for Canadian equity markets including the TSX, TSX Venture Exchange, Canadian Trading and Quotation System, Bloomberg Tradebook Canada Company, Liquidnet Canada Inc., Markets Securities Inc., Shorcan ATS Limited and Pure Trading. RS is recognized by the Autorite des marches financiers in Quebec and the securities commissions of Ontario, Manitoba, Alberta and British Columbia to regulate the trading of securities on these marketplaces by participant firms and their trading and sales staff. RS is mandated to conduct its regulatory activities in a neutral, cost-effective, service-oriented and responsive manner.

Contact Information

  • Market Regulation Services Inc.
    Melissa MacKewn
    Acting Chief Enforcement Counsel, Eastern Region
    416-646-7229
    416-646-7285 (FAX)
    melissa.mackewn@rs.ca
    www.rs.ca