Ventum Financial Corp., formerly known as Echelon Wealth Partners Inc., has been fined $2.3 million by the Canadian Investment Regulatory Organization (CIRO) following regulatory failures related to over-the-counter (OTC) stock trades exceeding $185 million in value over four years.
An investigation revealed that between July 2018 and June 2022, Ventum allowed four Caribbean-based foreign brokerages, Financials Worldwide Inc., Weiser Asset Management, Blacktower Ltd., and Valor Capital Ltd., to execute heavy trading in the US OTC market through its platform without proper oversight, News.Az reports, citing Wealth Professional.
CIRO’s settlement includes a $500,000 fine, $1.7 million in disgorgement, and $100,000 in costs payable by Ventum. Additionally, Stephen Burns, former managing director of electronic trading who left the firm in April 2024, was fined $100,000, ordered to pay $25,000 in costs, and suspended from the industry for six months.
The regulatory body found that Ventum failed to conduct adequate due diligence on the four brokerages, neglected to “learn and remain informed of the essential facts” concerning the accounts and orders, and did not properly supervise the high-risk OTC trades. These firms and their clients have been linked to multiple cases of securities fraud, some involving criminal activity, according to U.S. regulators and prosecutors.
OTC shares, often illiquid and lightly regulated, are frequent targets for pump-and-dump schemes, highlighting the critical importance of vigilant supervision.
The investigation began in October 2018 following a report from an unnamed Canadian brokerage shortly after Burns joined Ventum. Prior to his arrival, OTC trading was reportedly infrequent, but it surged to over $185 million during the four years Burns led the electronic trading division.
Ventum CEO David Cusson described the settlement as related to “legacy business operations” that were closed prior to the firm’s merger. He emphasized that “significant enhancements” to compliance, risk management, and oversight have been implemented in the past two years. Ventum has closed the flagged accounts, appointed new leadership, and updated governance policies, including hiring a new chief operating officer and a vice-president of legal and regulatory affairs within the last year.
