IN THE MATTER OF Trapeze Capital Corp., Herbert Abramson and Randall Abramson - Settlement Accepted
News provided by
Investment Industry Regulatory Organization of Canada (IIROC) - General NewsApr 27, 2012, 04:53 ET
TORONTO, April 27, 2012 /PRNewswire/ - On April 27, 2012, a Hearing Panel of the Investment Industry Regulatory Organization of Canada (IIROC) accepted a Settlement Agreement between the IIROC staff, Trapeze Capital Corp., Herbert Abramson and Randall Abramson.
Trapeze Capital Corp., Mr. Herbert Abramson and Mr. Randall Abramson admitted they inaccurately assessed the risk associated with many of the investments purchased on behalf of clients in managed accounts. They did not give adequate consideration to certain risks, resulting in purchased securities being assessed as lower risk than they ought to be.
As a result of their misclassifications of risk of securities, Trapeze Capital Corp., Mr. Herbert Abramson and Mr. Randall Abramson failed to ensure investments made were suitable for all of their clients. Also as a result, statements made in marketing materials distributed to their clients understated the risks associated with Trapeze's investing strategy and a number of recommended investments. Further, in some cases, Trapeze Capital Corp. failed to adequately ascertain clients' investment needs, experience, investment objectives and risk tolerance, prior to investing their assets.
Specifically Trapeze Capital Corp., Mr. Herbert Abramson and Mr. Randall Abramson admitted to the following violations:
- Between 2007 and 2010 (the "Material Time"), in the manner described in paragraphs 24-31 of the Settlement Agreement, Trapeze Capital Corp., Mr. Herbert Abramson and Mr. Randall Abramson failed to ensure the investment recommendations made to clients were suitable for all of them, contrary to IIROC Dealer Member Rules 1300.1(a), (p) and (q) (IDA Regulations 1300.1(a), (p) and (q) prior to June 1, 2008).
- During the Material Time, Trapeze Capital Corp., Mr. Herbert Abramson and Mr. Randall Abramson failed to ensure all sales literature and correspondence issued or sent to clients adequately presented the potential risks of investing with Trapeze Capital Corp., Mr. Herbert Abramson and Mr. Randall Abramson in the manner described in paragraph 32 of the Settlement Agreement, thereby engaging in business conduct detrimental to public interest, contrary to IIROC Dealer Member Rule 29.1(IDA By-law 29.1 prior to June 1, 2008).
- During the Material Time, Trapeze Capital Corp. failed to properly discharge its Know-Your-Client obligations for a number of client accounts in the manner described in paragraphs 33 and 34 of the Settlement Agreement, contrary to IIROC Dealer Member Rule 1300.1(a) (IDA By-law 1300.1(a) prior to June 1, 2008).
Pursuant to the Settlement Agreement, Trapeze Capital Corp., Mr. Herbert Abramson and Mr. Randall Abramson agreed to the following penalty:
| a) | Trapeze shall submit to a review of its practices and procedures by an independent consultant, to be approved by staff at Trapeze's expense; |
| b) | Trapeze shall send a written communication to all clients, in a manner and form acceptable to staff, outlining Trapeze's intention to conduct account reviews, and explaining the reviews are required by IIROC to ensure (i) each client's current Know-Your-Client information is collected and documented, and (ii) the investments in each client's account(s) are suitable given the client's age, financial circumstances, investment needs and objectives, and risk tolerance; |
| c) | Trapeze shall conduct account reviews with all of their clients, and shall explain to each client the review is required because of concerns regarding understatement of risk arising from Trapeze Capital Corp.'s, Mr. Herbert Abramson's and Mr. Randall Abramson's failure to adequately consider factors such as concentration risk, price volatility risk and liquidity risk; |
| d) | Trapeze agrees it shall not increase its fees or take any other steps that would result in its clients bearing any costs or expenses incurred by it relating to the Settlement Agreement, including any costs associated with retaining the consultant; and |
| e) | Trapeze Capital Corp., Mr. Herbert Abramson and Mr. Randall Abramson shall pay, jointly and severally, a $500,000 fine to IIROC. |
Trapeze Capital Corp., Mr. Herbert Abramson and Mr. Randall Abramson also agreed to pay costs in the amount of $200,000.
The Settlement Agreement is available at
http://docs.iiroc.ca/DisplayDocument.aspx?DocumentID=D497C7384F6F4A05A4AEB93FFA3D6D53&Language=en
The Hearing Panel's decision will be made available at www.iiroc.ca.
Documents related to ongoing IIROC enforcement proceedings - including Reasons and Decisions of Hearing Panels - are posted on the IIROC website as they become available. Click here to search and access all IIROC enforcement documents.
IIROC formally initiated the investigation into Trapeze Capital Corp.'s, Mr. Herbert Abramson's and Mr. Randall Abramson's conduct in July 2009. Trapeze Capital Corp is an IIROC-regulated firm. The violations occurred when Mr. Herbert Abramson and Mr. Randall Abramson were Registered Representatives and Portfolio Managers with Trapeze Capital Corp. Mr. Randall Abramson was President, Chief Compliance Officer and Ultimate Designated Person of Trapeze, and Mr. Herbert Abramson was the Chairman, Alternate Designated Person, and a director of Trapeze when the violations occurred. Mr. Herbert Abramson and Mr. Randall Abramson continue to be Registered Representatives with Trapeze Capital Corp.
* * *
IIROC is the national self-regulatory organization which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada. Created in 2008 through the consolidation of the Investment Dealers Association of Canada and Market Regulation Services Inc., IIROC sets high quality regulatory and investment industry standards, protects investors and strengthens market integrity while maintaining efficient and competitive capital markets.
IIROC carries out its regulatory responsibilities through setting and enforcing rules regarding the proficiency, business and financial conduct of dealer firms and their registered employees and through setting and enforcing market integrity rules regarding trading activity on Canadian equity marketplaces.
IIROC investigates possible misconduct by its member firms and/or individual registrants. It can bring disciplinary proceedings which may result in penalties including fines, suspensions, permanent bars, expulsion from membership, or termination of rights and privileges for individuals and firms.
All information about disciplinary proceedings relating to current and former member firms is available in the Enforcement section of the IIROC website. Background information regarding the qualifications and disciplinary history, if any, of advisors currently employed by IIROC-regulated firms is available free of charge through the IIROC AdvisorReport service. Information on how to make investment dealer, advisor or marketplace-related complaints is available by calling 1.877.442.4322.
SOURCE Investment Industry Regulatory Organization of Canada (IIROC) - General News
WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?
Newsrooms &
Influencers
Digital Media
Outlets
Journalists
Opted In
Share this article