The Investment Industry Regulatory Organization of Canada (IIROC) has announced that the governments of the Northwest Territories, Nunavut, and Yukon have granted it a stronger ability to protect investors.
Through authorization orders from the Superintendents of Securities of the three territories, IIROC has secured the legal authority to collect fines against individuals it has disciplined directly through each jurisdiction’s Supreme Court.
Aside from fine collection, the orders improve IIROC’s ability to cooperate with third parties during disciplinary hearings. The three territories have effectively joined seven provinces — Nova Scotia, Prince Edward Island, Quebec, Ontario, Manitoba, Alberta, and British Columbia — in taking concrete steps to enhance IIROC’s enforcement toolkit.
"We commend the Governments of the Northwest Territories, Nunavut and Yukon, as well as their Superintendents of Securities, for providing IIROC with these important investor protection tools," said IIROC Senior Vice-President of Enforcement and Registration, Elsa Renzella. “We are now in a better position to enforce our disciplinary actions, holding wrongdoers accountable and sending a strong message of deterrence to those who might consider taking advantage of investors.”
Over the past year, IIROC has been working to gain additional enforcement powers, particularly in collecting fines, across the country. According to IIROC’s 2017 Enforcement Report released in May, fines imposed on individuals have been significantly higher than those against firms for five years running. However, collection rates from individual offenders have been consistently low; 2016 was the worst year, during which the collection rate from individuals was a mere 8.3%.
Last year, IIROC imposed $2,265,000 in fines against individuals, compared to $830,000 for firms. The collection rate during the year, however, was only 16.2% for individuals and 91.2% for firms.
“Assessed fines do not include fines imposed during the year for cases that have been appealed or are still within the time period to appeal,” the IIROC report noted.
In provinces where it has been given the ability to enforce penalties through courts, according to the self-regulatory organization, its collection rates over time are significantly higher than the national collection rate.
In 2017, 45% of IIROC’s prosecutions involved unsuitable investment recommendations, which often lead to financial losses for senior or vulnerable investors. Seniors were involved in 30% of the cases it pursued last year.
“The message is clear: if you abuse your clients' trust, you will face serious consequences,” Renzella said.
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