In its 2016 enforcement report, IIROC reveals it collected 100% of fines against firms but only 8% against individuals. The SRO has been working hard to remedy the ongoing discrepancy by pursuing court authority to collect fines. It’s a key enforcement priority in IIROC’s 2016–2019 strategic plan.
IIROC currently has court authority in Alberta, Quebec and P.E.I.
“Extending this authority further would send a strong message of deterrence to potential wrongdoers and would increase investor confidence in the system,” says IIROC in its enforcement report. Ontario is the latest win for the SRO, with the province announcing last March that it would introduce legislative amendments to give IIROC court authority to collect fines.
An argument against IIROC obtaining this power in Ontario is provided by Alistair Crawley, a partner at Crawley MacKewn Brush, in an article in the Financial Post.
He says that the 100% collection rate against firms is “more telling because it is through the dealers that IIROC’s rules and policies are implemented and enforced by internal compliance and risk-management personnel.” So, by the time a case against an advisor makes its way before an IIROC hearing panel, the advisor has likely already been subject to internal discipline by the dealer.
Further, he contends additional collected fines don’t compensate harmed investors. “Fines collected by IIROC deplete the financial resources available to a dealer or adviser to satisfy investor claims pursued through the civil courts or the IIROC arbitration process.”
He also suggests a legal consequence to granting IIROC court authority: the SRO might need to be restructured as a public regulator.