Highlights from IIROC’s Annual Enforcement Report for 2019

The Investment Industry Regulatory Organization of Canada (“IIROC”) recently published its annual Enforcement Report for 2019 (the “Report”), highlighting its enforcement and discipline activities over the course of 2019. The Report summarises IIROC’s enforcement process, activities, priorities, statistics and also provides illustrative case highlights.

Summary of IIROC Enforcement Related Activities

 

2019

2018

2017

Investigations completed 

104

127

128

 

 

 

 

Enforcement against individuals

 

 

 

Individuals prosecuted

28

42

37

Individuals suspended

14

21

16

Individuals permanently barred

3

5

6

Sanctions imposed on individuals

$1.9MM

$3.2MM

$3.4MM

Sanctions collected from individuals

29%

28%

16.2

 

 

 

 

Enforcement against firms

 

 

 

Firms prosecuted

8

10

7

Firms whose registration was terminated

1

2

1

Sanctions imposed on firms

1.8MM

$1MM

$1MM

Sanctions collected from firms

97%

100%

91.2%

 

Activities that Attracted Enforcement Action

IIROC continues to have a “core focus” on suitability issues which represented a third of all prosecutions, but is pursuing a variety of cases, including novel trading and gatekeeping cases.

Among the subject matters resulting in enforcement sanctions either by way of settlement or panel decisions were proceedings involving improper handling of:

  • confidential client information;
  • discretionary trading;
  • trading in new issues;
  • order entry e.g., “Spoofing”;
  • gatekeeping obligations of advisors;
  • personal financial dealings and outside business activities;
  • suitability with respect to investments for elderly or vulnerable investors; and
  • duties related to senior officers and investment advisors.

Future Focus

IIROC’s priorities include:

  • Strengthening IIROC’s legal authority throughout Canadian jurisdictions to collect fines;
  • Strengthening IIROC’s authority to collect and present evidence at enforcement proceedings;
  • Statutory immunity for IIROC staff when acting in good faith performance of their regulatory functions in the public interest; and
  • Developing alternative forms of disciplinary action that provide greater flexibility and result in a more responsive Enforcement Department. (See our previous article on the topic here)

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