The Investment Industry Regulatory Organization of Canada
(IIROC) has taken a respectable step toward improving transparency. The organization has just published a list of those who have failed to pay fines, making available to the public the names of advisors who have yet to make good on professional misappropriations.
Advisors hoping to attract new business had better be careful about keeping their names out of print. "We are publishing this information to improve transparency and give investors another tool they can use to conduct due diligence when choosing to work with an advisor," said Paul Riccardi, a vp at IIROC.
The new and aptly-titled Unpaid Fines List, available here
, names individuals, advisors and other registered employees that have failed to pay fines or disgorgement costs imposed on them as a result of disciplinary action.
The first list, published earlier this week, has more than 120 names on it. The largest outstanding penalty is for $5 million against former RBC DS rep Henry Cole who has admitted that he misappropriated client funds, created false documents and misrepresented payments as returns on investment in 2009 and 2010. Another five individuals on the list each owe more than $1 milllion.
Interestingly, IIROC collects the vast majority of fines levied on dealers, but most individual sanctions go unpaid. The agency has little recourse in most provinces to enforce penalties if the disciplined person leaves the industry. In 2013 IIROC collected 98.1% of the monetary penalties assessed against firms, while only 10.5% of the penalties assessed against individuals have been collected.
Individuals who fail to pay fines owing within 60 days will end up on the list. Failure to pay a fine will result in IIROC taking immediate steps to suspend individuals until payment is made.