Ameritrade, Datek to set up Canadian shops
Settlement deal: U.S. online brokers pay $800,000 fines
Garry Marr
Financial Post
Datek Online Brokerage Services Inc. and Ameritrade Inc. will be seeking registration to do business in Canada as part of a settlement with securities regulators across the country.
The two U.S. online brokerages, along with TD Waterhouse Investors Services Inc. (US), will each pay an $800,000 fine for allowing Canadian investors to open accounts despite the fact the brokerages were not registered to do business in Canada.
Under an agreement with the Canadian Securities Administrators, an umbrella group for 13 securities regulators in the provinces and territories, Datek and Ameritrade will now seek registration with the Investment Dealers Association of Canada. TD Waterhouse had already transferred its Canadian clients to its operations in Canada.
"We want to ensure Canadian residents have the protection of the law," said Sasha Angus, chief enforcement counsel with British Columbia Securities Commission, which negotiated the settlement on behalf of the CSA.
Datek and Ameritrade have both been granted exemptions to continue making trades on behalf of existing clients until Sept. 30 while they apply for registrations.
The Financial Post first reported in November that Datek had applied to the IDA for registration.
In a joint submission from securities commissions from Ontario, Quebec, Manitoba, Nova Scotia, British Columbia and Alberta, it was agreed that three firms had been making trades on behalf of residents in Canada since January, 1999, without being registered to do so -- a violation of securities legislation in all of the jurisdictions.
The Ontario Securities Commission called the conduct "contrary to the public interest" but many Canadians have been opting for the U.S.-based accounts because of the lower brokerage fees and the investment products that are otherwise not available in Canada.
Mr. Angus said the regulators were not trying to punish Canadian investors but instead wanted to make sure they were protected by local laws.
"The Internet is just another medium of trading, it's no different that using a telephone," he said.
Regulators say there are other brokerages from outside the country currently offering to trade securities to Canadians without being registered and they will track them down.
"We are able to track them through various methods," said Mr. Angus, noting firms are forced to advertise when they open for business. |
