A survey of more than 1,000 Canadian investors has revealed broad approval of the Investment Industry Regulatory Organization of Canada’s (IIROC) proposals to provide alternative enforcement approaches to allow early settlement of disciplinary cases and avoid protracted hearings for minor rule violations.
Conducted as part of IIROC’s public consultation on its proposals, the poll conducted by the Strategic Counsel found that:
- 76% support an early settlement program to foster the resolution of disciplinary cases before they get to an IIROC disciplinary hearing panel
- 63% are in favour of more flexibility in handling minor violations. These include inadvertent or unintentional actions that lead to little or no harm to investors
- 70%-85% agreed serious violations — including those that cause significant investor harm, show a pattern of misconduct, or significantly harm the integrity of Canada’s markets — should result in a formal hearing before an IIROC panel.
When asked which factors should count in determining eligibility for adjudication in a minor violation program, investors agreed that cases where compensation has been paid (46%), corrective measures have been taken (45%), and violations were reported to IIROC (43%) may be considered.
Survey respondents also wanted to change one part of the proposals, which concerned fines for minor rule violations. Many investors thought that the penalties, set at $2,500 for individuals and $5,000 for firms, were too low.
More than half of those polled also thought that IIROC should name and shame individuals and firms in all cases of rule breaches, even if they are just minor violations.
Overall, the investors polled believed that enacting the changes would be critical to improve IIROC’s enforcement effectiveness. Many also said the changes would boost their confidence in investing, the Canadian investment industry and markets, and the regulation thereof.
“It's important that Canadian investors have a voice and the ability to provide their input on our regulatory proposals,” said Elsa Renzella, senior vice-president for Registration and Enforcement. “We will carefully consider this input, along with the comments received, in refining our alternative discipline proposals.”
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