ABCP - Settlements reached following a joint investigation

MONTREAL , Dec. 21 /CNW Telbec/ - The Autorité des marchés financiers (AMF), the Ontario Securities Commission (OSC) and the Investment Industry Regulatory Organization of Canada (IIROC) announced that they have reached settlements in connection with the investigations into the Canadian asset-backed commercial paper (ABCP) market providing for the payment of $138.8 million in administrative penalties and investigation costs, broken down as follows:

    
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                 Institution                             Amount obtained
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    National Bank Financial Inc. (NBF)                     $75 million
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    Scotia Capital Inc. (Scotia)                           $29.27 million
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    Canadian Imperial Bank of Commerce and
     CIBC World Markets Inc. (CIBC/CIBCWM)                 $22 million
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    HSBC Bank Canada (HSBC)                                $6 million
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    Laurentian Bank Securities Inc. (Laurentian)           $3.2 million
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    Canaccord Financial Ltd. (Canaccord)                   $3.1 million
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    Credential Securities Inc. (Credential)                $0.2 million
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With regard to financial penalties imposed, a fair and appropriate use for the sanction monies will be determined in accordance with applicable laws, court orders and in the public interest. In addition, the sanctions approved by the respective organizations include a focus upon compliance - each institution agrees to have an independent compliance review or verification of its fixed income department undertaken by an outside consultant.

Settlements were reached between the regulators and those seven institutions involved in the Canadian third party ABCP market. The OSC has reached two settlements: one with CIBC and the other with HSBC. IIROC has reached three settlements, with Scotia, Canaccord and Credential respectively. Lastly, the AMF has reached two settlements, one of which is with NBF, and the other with Laurentian.

Five of the institutions involved are alleged to have failed to adequately respond to issues in the third party ABCP market, as they continued to buy and/or sell without engaging compliance and other appropriate processes for assessing such issues. Particularly, they did not disclose to all their clients the July 24th e-mail from Coventree providing the subprime exposure of each Coventree ABCP conduit. In the case of Credential and Canaccord, these institutions are alleged to have failed to take adequate steps to ensure that its Approved Persons understood the complexities of the third party ABCP and, in not taking these adequate steps, did not ensure that the purchase of third party ABCP was appropriately understood by its clients.

The enforcement review activity related to the ABCP matter is the product of a close collaboration among the AMF, the OSC and IIROC who worked together in the public interest to respond to the securities regulatory issues arising from the ABCP market freeze.

The OSC and IIROC have begun disciplinary hearings against Coventree and Deutsche Bank Securities Limited in this matter.

The Autorité des marchés financiers (AMF) is the regulatory and oversight body for Québec's financial sector.

The OSC is the regulatory body responsible for overseeing Ontario's capital markets, which include the equities, fixed income and derivatives markets.

IIROC is the national self-regulatory organization which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada .

    
    Information:
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    AUTORITÉ DES MARCHÉS FINANCIERS

    Media only:                             Information Centre:

    Sylvain Théberge                        Québec City: 418-525-0337
    Spokeperson                             Montréal: 514-395-0337
    514-940-2176                            Toll-free: 1-877-525-0337
                                            www.lautorite.qc.ca


    ONTARIO SECURITIES COMMISSION

    For Media Inquiries:                    For Investor Inquiries:

    Theresa Ebden                           OSC Contact Centre
    Senior Communications Specialist        416-593-8314
    416-593-8307                            1-877-785-1555 (Toll Free)

    Robert Merrick
    Senior Communications Specialist
    416-593-2315


    INVESTMENT INDUSTRY REGULATORY ORGANIZATION OF CANADA

    For Media Inquiries:

    Connie Craddock
    Vice President Public Affairs
    416-943-5870
    http://www.iiroc.ca
    

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For further information: Autorité des marchés financiers: Media only: Sylvain Théberge, Spokeperson, [phone]; Information Centre: Québec City: [phone]; Montréal: [phone]; 1-877-525-0337; www.lautorite.qc.ca; Ontario Securities Commission: For Media Inquiries: Theresa Ebden, Senior Communications Specialist, [phone]; Robert Merrick, Senior Communications Specialist, [phone]; For Investor Inquiries: OSC Contact Centre: [phone]; 1-877-785-1555; Investment Industry Regulatory Organization of Canada: For Media Inquiries: Connie Craddock, Vice President Public Affairs, [phone]; http://www.iiroc.ca