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Northern Securities brokerage faces looming shutdown

Vic Alboini

Fernando Morales/The Globe and Mail

Vic Alboini's boutique investment firm is scrambling to find a new carrying broker and avoid being shut down by the end of the year.

The Investment Industry Regulatory Organization of Canada (IIROC) issued a notice Monday saying Northern Securities Inc. has lost its business agreement with Penson Financial Services Canada, which was acting as the carrying broker for the small firm. Unless Northern can find a new carrying broker by Dec. 31, IIROC said it will seek an order suspending the firm's membership, which essentially means it will shut it down.

Penson announced plans in September to close its Canadian operations. It provides clearing, settlement and custodial services to smaller brokerage firm clients, including Northern. Penson said in September that many of its clients will switch over to Fidelity Clearing as their new carrying broker.

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Mr. Alboini issued a notice Monday saying Northern "has devoted substantial time and effort" to finding a new carrying broker or an "omnibus" broker that would offer all back-office services, including providing monthly statements to clients.

The notice also said Penson has indicated it may be prepared to extend the Dec. 31 termination date to allow Northern to finalize an alternative arrangement.

"However, there is no certainty that Northern will be able to make satisfactory alternative arrangements with these other service providers, or certainty as to an agreed-upon extension of the termination date with Penson," Mr. Aboini said in the notice.

Mr. Alboini, known as an outspoken critic of technology firm Research In Motion Ltd., was in the headlines in November when IIROC suspended him for two years and permanently barred him from being the "ultimate designated person" at a brokerage firm for failing to comply with several industry trading rules.

That decision was put on hold in late November after Mr. Alboini and two others filed an appeal of the decision with the Ontario Securities Commission. The OSC has stayed the sanctions until Dec. 18 to give both sides time to deal with the appeal.

In the meantime, IIROC said it will hold a hearing Wednesday to seek an order requiring Northern to notify its clients about restrictions that will be placed on their accounts as of Dec. 31 because of the termination of the carrying broker arrangement.

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About the Author
Real Estate Reporter

Janet McFarland is the real estate reporter for The Globe and Mail’s Report on Business, with a focus on residential real estate trends. She joined Report on Business in 1995, and has specialized in reporting on corporate governance, executive compensation, pension policy, business law, securities regulation and enforcement of white-collar crime. More

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