The Investment Industry Regulatory Organization of Canada (IIROC) released its 2016-17 Annual Report on August 28, 2017. As 2016-17 represented the first full year of IIROC’s Strategic Plan (previously discussed here), IIROC’s priorities for the year were focused on activities and initiatives in support of the Plan.
Highlights of the Annual Report
As noted in the Annual Report’s accompanying press release, highlights of the year included:
- Additional Legal Authority. There were several notable developments on this front:
- Ontario and Prince Edward Island granted IIROC the ability to collect fines through their respective courts. It is hoped that this will lead to higher collection rates, as has been the case in Alberta and Quebec since those provinces granted IIROC the same ability.
- Alberta expanded IIROC’s legal authority to collect evidence during investigations, while also implementing measures to protect the organization and members of its disciplinary hearing panels from lawsuits related to the discharge of their public-interest regulatory responsibilities.
- Co-operative information sharing agreements with insurance regulators in Alberta, British Columbia and Saskatchewan were entered into. These agreements provide for the sharing of information relating to investigations and disciplinary actions. Agreements of this type already exist in Ontario and Quebec.
- Transparency. IIROC’s corporate bond information website now publishes corporate bond trades for all IIROC-regulated firms.
- Protection of Client Data. IIROC worked with regulated firms to assess their cybersecurity preparedness and provide expertise in this area. Firm-specific statistics with respect to the number and nature of complaints and inquiries received by IIROC were created and made public.
- Best Interest Requirements. IIROC reviewed a cross-section of firms to assess how well they are meeting the “best interest” requirements of IIROC’s conflict of interest rules regarding compensation. The results of the review were published together with suggested best practices.
As the national self-regulatory organization which oversees all investment dealers and their trading activity in Canada’s debt and equity markets, IIROC oversees 28,831 approved persons and 179 member firms. In 2016-17 IIROC completed 128 enforcement investigations as well as 59 disciplinary hearings that resulted in 26 suspensions and 7 permanent bans. $3,314,000 in penalties were assessed against individuals, of which 14% ($447,601) were collected. Against firms, $770,000 in penalties were assessed, with a collection rate of 74% ($570,000).