Canadian investment bank Canaccord Genuity Group Inc. has announced it is approaching a comprehensive settlement with multiple U.S. regulatory authorities concerning compliance deficiencies within its non-core American trading operations.
Financial Provisions for Settlement
The firm has now allocated a total of US$75 million to cover anticipated penalties. In its most recent fiscal quarter, Canaccord added US$55 million to its existing provisions related to this enforcement matter, according to a statement released in November 2024.
Chief Executive Officer Dan Daviau stated that the company has made significant progress, noting, "We've made significant progress and ongoing investments to upgrade and transform our compliance infrastructure." The final details of this expected "unified resolution" are pending and contingent on the U.S. government reopening, with finalization likely taking several more months.
Background and Impact on Business
The regulatory probe, which Canaccord first disclosed in June 2023, is tied to its wholesale market-making activities. The company had previously warned it might face a "significant penalty." This ongoing matter had a direct business impact, preventing the firm from receiving timely regulatory approvals for a proposed management-led buyout, which ultimately collapsed as a result.
FINRA Sanctions for Compliance Officers
Earlier this year, the Financial Industry Regulatory Authority (FINRA) reached settlements with two of Canaccord's most senior U.S. compliance personnel.
Diane Daly, the firm's chief compliance officer from 2013 to 2023, agreed to a US$10,000 fine and a one-year suspension from acting in any principal capacity. FINRA alleged she failed to implement a reasonably designed Anti-Money Laundering (AML) program. A major red flag cited was that her compliance group escalated only 20 instances of potentially problematic trading over a four-year period, despite the firm conducting a high volume of low-priced trades.
Nicholas Lorenzo, the former head of Canaccord's trading compliance group, agreed to a US$5,000 fine and a nine-month suspension. The regulator alleged he improperly delegated supervisory duties without ensuring they were completed and failed to document assignments, causing confusion within the team. Lorenzo is now a compliance officer at Cantor Fitzgerald.
Both individuals settled the allegations without admitting or denying FINRA's findings. Separately, Andy Viles stepped down as the firm's chief legal officer in July and is no longer registered with FINRA.
