Discipline Penalties Imposed on Broadway Trading Inc.

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Discipline Penalties Imposed on Broadway Trading Inc.
– Violations of By-laws 17.1 and 17.2A


The Quebec District Council of the Investment Dealers Association of Canada (the
“Association”) has imposed discipline penalties on Broadway Trading Inc.
(“Broadway”).

On November 28, 2002, the Quebec District Council considered, reviewed and
accepted a Settlement Agreement negotiated between Broadway and Association Staff.
On December 10, 2002, the Quebec District Council released its reasons for accepting
the Settlement Agreement.
Pursuant to the Settlement Agreement, Broadway admitted that:
(a) Since about July 23, 2002, Broadway failed to maintain adequate activity
controls, contrary to Association By-law 17.2A and Policy 3 (Internal Control
Policy Statement 2), by operating without adequate controls on client trading
thereby jeopardizing Broadway’s capital position; and
(b) On four occasions, Broadway failed to maintain minimum risk adjusted capital,
as required by Association By-law 17.1.



Broadway’s membership in the Association shall be terminated on or before February
27, 2003, subject to any extension of time agreed to by Association Staff. Effective as
of November 28, 2002, and pending the termination of its membership, Broadway is
suspended from the Association. While suspended, Broadway shall, inter alia, not
have any trading accounts or dealings with investors and it must continue reporting its
financial position to the Association as it winds down its business. Broadway has also
agreed to consent to the appointment of a Monitor, Receiver, Administrator or Trustee
should the Association request its consent to effect such an appointment.
Broadway must also pay $ 6,000.00 toward the costs of this proceeding.


<b> Broadway is a day trading firm that has been a member of the Association since
February 27, 2002. On August 8, 2002, Broadway’s U.S. parent company, B.T.
Holding Inc. (“B.T.”), filed for Chapter 11 bankruptcy protection in the United States
of America. As a result of this development and B.T.’s inability to find a purchaser for
Broadway, Broadway would like to wind down its operations.
Since at least July 23, 2002, Broadway has had inadequate internal controls on client
trading. Although Broadway had a risk management system in place for the purpose of
limiting client trading, in order to ensure that clients did not exceed their deposits with
Broadway, this system was ineffective and permitted clients to trade in excess of their
deposits thereby jeopardizing Broadway’s capital position.</b> As a result of the
ineffectiveness of its internal controls, Broadway became capital deficient on four
occasions:
(i) on July 23, 2002, a capital deficiency of $ 93,000.00;
(ii) on July 24, 2002, a capital deficiency of $ 30, 000.00;
(iii) on July 25, 2002, a capital deficiency of $ 92,000.00 and
(iv) on August 5, 2002, a capital deficiency of $ 327,000.00.
Although Association Staff had requested that Broadway take steps to correct this
internal control problem, Broadway advised that it would prefer not to correct it given
its intention to wind down its operations. Without correcting this internal control
problem, Broadway’s capital adequacy would continuously be at risk.
Broadway has been in Level Two Early Warning status since August 21, 2002.
In its Reasons for Decision, the Quebec District Council also noted that no client
accounts suffered any losses at any time as a result of Broadway’s inadequate internal
controls or the capital deficiencies.
Kenneth A. Nason
Association Secretary

 

Thanks for posting CDN.

 

"On August 8, 2002, Broadway’s U.S. parent company, B.T.
Holding Inc. (“B.T.”), filed for Chapter 11 bankruptcy protection in the United States"

is this or was this broadway trading ....

the group that wrote the book on electronic daytrading

and then had some of their traders go to shoney after they

closed up shop ?

amazing if so ....


it would be my 3rd firm over the yrs

that went bust after I left them

block
harbor
broadway

:eek:

 

Looks like your the kiss of death dude!!!!!:eek:

 

What ever happened at Harbor. I remember talking to the head man, a Hungarian guy (can't remember his name) who wanted me to trade with his firm - I said no insurance, no thanks. A few weeks later I heard they blew out and he promised everyone in an email that they would all get their money back.

 

Can I short your current employer?

 

I thought Schonfeld bought Broadway?

 

Yes,

very interesting isn't it?

nitro

 

I know some traders at Broadway in Montreal and they have mentioned that trading activities have been stop in November for standard traders.

 

Yes it's the same guys George West and Freidfertig who wrote the electronic daytraders books. They were very cool at first but Friedfertig had a slight ego problem.