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by Mike Caswell

The Canadian Investment Regulatory Organization has imposed $315,000 in sanctions on Hongjia Liu, a former RBC Dominion Securities Inc. employee who inflicted $8.7-million in losses through a disastrous futures strategy. CIRO says that Mr. Liu used a "high-volume and high-risk" trading strategy that involved naked futures contracts, with a maximum loss that was potentially unlimited. The trading was done on a discretionary basis, contrary to RBC's policies, according to CIRO.

The penalties for Mr. Liu are contained in a settlement agreement that CIRO released on Monday, July 7. The $315,000 includes a $75,000 fine, disgorgement of $225,000 and $15,000 in CIRO's costs. In addition, Mr. Liu must serve a six-month suspension.

The case arises from widespread discretionary trading that Mr. Liu conducted between June, 2017, and December, 2019. According to CIRO, Mr. Liu had 63 futures clients, many of which are described in the settlement as high-net-worth individuals. He employed a "one-size-fits-all" strategy that involved futures contracts linked to energy, precious metals, soybeans, sugar, cotton and coffee.

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