The Investment Industry Regulatory Organization of Canada (IIROC) has fined the Mackie Research Capital Corporation (MRCC) and Patrick McCarthy for failing to contain confidential information regarding a proposed financing.
In the settlement agreement, MRCC admits that it failed to establish and enforce adequate policies and procedures for the receipt and containment of confidential information regarding a proposed financing. McCarthy, meanwhile, admits that he failed to comply with the company’s policies and procedures and failed to address that he was in possession of confidential information, all while he continued his marketing activities up to and following the public announcement of the deal. “In doing so, McCarthy failed to sufficiently consider whether he had been exposed to confidential information regarding a potential financing and whether he needed to take proactive steps in response, such as consulting with MRCC’s compliance department and restricting his institutional trading activities.”
The order continues, saying MRCC failed to sufficiently consider how the institutional sales trader could potentially become exposed to confidential information about proposed offerings, including through communications with MRCC corporate finance staff. IIROC states that the company did not have sufficient written policies, procedures and safeguards in place, and that it failed to place McCarthy on the company’s “watch list” that would allow compliance personnel to adequately supervise his trading activities.
Under the settlement agreement, MRCC agrees to pay a fine of $180,000 and costs of $20,000. McCarthy, meanwhile, has agreed to a fine of $100,000 and costs of $5,000. The trader is also suspended for one month and must complete IIROC’s Partners, Directors and Seniors Officer Course within 12 months.
