After concluding their consultation on potential conflicts of interest arising from soliciting dealer arrangements, the Canadian Securities Administrators (CSA) and the Investment Industry Organization of Canada (IIROC) have decided that their regulatory concerns are best addressed through IIROC guidance. IIROC Notice 19-0092 Managing Conflicts of Interest Arising from Soliciting Dealer Arrangements (the Notice) discusses the kinds of soliciting dealer arrangements (Arrangements) that raise the greatest regulatory concerns. Among other things, IIROC believes that member firms should avoid Arrangements that contemplate one-sided or success-based fees in contested director elections because IIROC thinks that such conflicts cannot be adequately managed through policies and disclosure.
Although the Notice is relevant primarily to IIROC members, the guidance is founded upon general principles and rules dealing with conflicts of interest. As such, it serves as a refresher for all registrants on the importance of assessing business arrangements (including, in particular, arrangements that provide for contingent compensation) to identify potential conflicts and determine whether they can be effectively managed or should be avoided altogether.