The annual Enforcement Report published by the Investment Industry Regulatory Organization of Canada (IIROC) on April 19, 2017 highlights IIROC’s increased enforcement activity in 2016, as well as an increase in complaints, proceedings, and sanctions imposed on disciplined individuals. Notably, however, IIROC’s collection rate for fines levied against individuals dropped to 8% in 2016.
IIROC’s enforcement activity increased in 2016:
- 138 investigations were completed (124 in 2015).
- 1,459 complaints were received (1,341 in 2015).
- 55 proceedings were commenced (25% increase from 2015).
- $3.12 million of sanctions were imposed on disciplined individuals ($2.95 million in 2015).
IIROC’s enforcement efforts were generally focused on suitability, representing over 40% of all regulatory prosecutions and 37% of complaints, and cases involving seniors, representing approximately one-third of both the case assessment matters reviewed and prosecutions completed. Other matters pursued included cases involving manipulative and deceptive trading, misappropriation, and failure to cooperate.
Additional Legal Authority Required
While IIROC’s collection rate from individuals dropped in 2016, IIROC’s ability to collect unpaid fines is not a new issue. As stated in the Enforcement Report, since IIROC was established in 2008, almost $32 million in fines remain uncollected from individuals. As a result, IIROC set a goal of increasing its legal authority to collect unpaid fines, as described in IIROC’s three-year plan published last year. Earlier this year, the Prince Edward Island Office of the Superintendent of Securities granted IIROC the authority to directly register disciplinary decisions with the Supreme Court of PEI, and in March 2017, the Ontario government announced its intention to strengthen investor protection in Ontario by introducing legislative amendments to allow IIROC to pursue the collection of disciplinary fines directly through the courts. Alberta and Quebec had previously granted IIROC the same ability, resulting in higher collection rates in those provinces.
IIROC is the national self-regulatory organization which oversees all investment dealers and their trading activity in Canada’s debt and equity markets. For further information, please see Enforcement Report 2016.