CIRO fines firm $175,000 for not providing relationship terms to thousands of new clients
Canadian Investment Regulatory Organization (CIRO) approved a settlement agreement with TradeZero Canada Securities ULC (TradeZero) on May 14, after its hearing panel cited multiple regulatory contraventions.
According to the settlement agreement, TradeZero failed to perform adequate daily and monthly supervision of trading activity and insufficiently reviewed client communications between March 2022 and January 2023.
The firm also failed to provide required relationship disclosure information to thousands of clients during account openings.
CIRO stated that although TradeZero had policies in place, it did not maintain an adequate audit trail of supervisory reviews, lacked sufficient record-keeping, and produced only limited and incomplete documentation.
For instance, the firm could only retrieve supervision notes for the period of June 7 to June 23, 2022, and these lacked supporting detail.
The firm’s supervisory deficiencies extended to real-time communication tools.
While TradeZero used a live chat system with a “whisper” function allowing compliance personnel to monitor and guide agents during client interactions, CIRO found that records of this oversight were limited and did not demonstrate adequate supervision.
Additionally, CIRO highlighted that TradeZero did not include a Relationship Disclosure Document in its account opening materials during the relevant period.
Although clients acknowledged reading such a document, it was not provided to them.
The firm only began sending the document in August 2023 and later automated its distribution.
TradeZero agreed to pay a fine of $175,000 and costs of $15,000.
As part of remedial steps, the firm revised its policies in December 2023 and engaged a third-party regulatory consultant.
It also performed a retrospective review of trading and client communication and found no further issues.
CIRO noted that TradeZero had no disciplinary history, received no client complaints related to the supervision failures, and took proactive measures under new leadership beginning in 2023.
TradeZero is a CIRO-regulated Order Execution Only (OEO) dealer offering trading in US equities and options to Canadian retail clients.
