RBC DS sanctioned for violating trade rules

Under the settlement, the company agreed to acquire 51.2 million shares of Baytex Energy Corp. in September 2023. to buy from three institutional clients – Rocky Creek Resources, LLC, JSTX Holdings, LLC and Juniper Capital III GP, LP – and then sell approximately 4.5 million of those shares to several other Canadian clients.

Originally the transaction was to be executed by RBC DS and pressed to the market, but after consultation with the sellers it was determined that the transaction would be priced in US dollars and executed as a block trade by RBC’s US subsidiary, RBC. LLC.

The US branch then transferred the shares to RBC DS, which sold the shares to its Canadian customers.

A few days after the transaction occurred, it was brought to the attention of CIRO’s market policy department by several other dealers, the settlement said. And after RBC DS’ Chief Compliance Officer was alerted, they filed a report confirming that no regulatory exemption had been requested to allow the trading to take place off-market.

“The transfer of shares from RBC LLC to RBC DS and the sale to Canadian customers occurred off-market, but RBC DS did not seek regulatory relief,” the settlement said. As a result, the transfer and sale violated Canadian trade rules and the company’s own policies, the settlement said.

The traders involved in the transaction were subject to internal discipline, the settlement said, and RBC DS agreed to provide trading rules training to those traders “to ensure a full understanding” of the requirements in this type situations.

The company has also updated its policies and procedures to protect against future breaches, especially for block trades involving interlisted securities.