Ventum admits compliance failures tied to Caribbean firms trading US OTC stocks through its platform
More than $185m in US over-the-counter stock trades flowed through a Canadian dealer over four years—without proper oversight.
According to The Globe and Mail, Ventum Financial Corp., formerly Echelon Wealth Partners Inc., admitted to regulatory failures that allowed four foreign brokerages to trade heavily in the US OTC market through its platform.
The Canadian Investment Regulatory Organization (CIRO) approved a $2.3m settlement with Ventum after finding the firm broke industry rules between July 2018 and June 2022.
The agreement stated Ventum failed to perform due diligence on four Caribbean-based brokerage firms—Financials Worldwide Inc., Weiser Asset Management, Blacktower Ltd., and Valor Capital Ltd.—which used dealer accounts to execute large volumes of OTC trades.
CIRO said Echelon failed to “learn and remain informed of the essential facts” about those accounts and orders.
The four brokerages and their clients have been linked to multiple cases of securities fraud, some of them criminal, according to US regulators and prosecutors.
OTC shares are typically illiquid and lightly regulated, making them common targets for pump-and-dump schemes.
CIRO said Echelon failed to act as a gatekeeper for this high-risk activity and did not properly supervise the trades.
Regulators added that prior to Stephen Burns joining the firm in 2018 as managing director of electronic trading, OTC trading was “infrequent.”
In the four years following his arrival, Echelon executed more than $185m worth of OTC trades.
CIRO launched its investigation in October 2018, after an unnamed Canadian brokerage filed a report six months into Burns’ tenure.
Ventum has agreed to pay a $500,000 fine, $1.7m in disgorgement, and $100,000 in costs.
Burns, who left in April 2024, will pay a $100,000 fine, $25,000 in costs, and has accepted a six-month suspension from the industry.
The Globe and Mail reported he could not be reached for comment.
David Cusson, CEO of Ventum, told The Globe and Mail the settlement involved “legacy business operations” that had been closed prior to the firm’s merger.
He stated that over the past two years, “significant enhancements have been made to compliance, risk management and oversight across the organization.”
Ventum confirmed it has since closed the accounts flagged in the investigation, appointed new leadership, and implemented “updated and enhanced governance policies and procedures.”
Within the past year, Ventum appointed a new chief operating officer and vice-president of legal and regulatory affairs.
As of June 2024, The Globe and Mail reported that the firm also introduced a new policy to restrict physical certificate deposits of US unlisted securities.
It will not accept deposits over US$10,000 or 50,000 shares, and all deposits must include a US securities deposit letter. Exemptions require sign-off by two directors, partners or officers.
Ventum was formed after Echelon merged with PI Financial Corp. in 2024.
The firm first launched in 2010 as Euro Pacific Canada, rebranded in 2016 after acquiring Dundee Goodman Private Wealth, and merged with PI Financial in March 2023.
PI’s former owner, Gary Ng, has since been charged with fraud and money laundering, and banned from the industry.
Later in 2023, Echelon placed a $30m lien on the assets of Traynor Ridge Capital Inc. after its collapse and the death of its founder, Christopher Callahan.
Echelon reported $19.8m in losses from settling trades related to that fund.
