The Investment Industry Regulatory Organization of Canada (IIROC) published its annual Enforcement Report on April 19. The report shows the regulator was only able to collect eight per cent of the fines against individuals across the country, an almost 50 per cent drop from 2015.
Total sanctions imposed by IIROC on disciplined individuals increased year over year - $3.12 million in 2016 up from $2.95 million in 2015, noted the report. However, while IIROC collected 100 per cent of the fines it imposed against firms, the regulator says its inability to collect from most sanctioned individuals demonstrates its need for more enforcement authority. “This collection rate illustrates the importance of IIROC obtaining additional legal authority from various provincial and territorial governments to improve fine collection and other enforcement actions,” said the regulator in an announcement.
Unsuitable investments top complaint
In terms of enforcement activity during 2016, IIROC reports that it completed 138 investigations compared to 124 in 2015. The regulator began 55 proceedings in 2016, a 25 per cent increase from 2015.
IIROC also saw a year-over-year increase in the total number of complaints received with 1,459 in 2016, compared to 1,341 the year prior. Unsuitable investments continued to be the top complaint received and prosecuted by IIROC with suitability cases representing 37 per cent of complaints and more than 40 per cent of its regulatory prosecutions.
Legal authority to collect disciplinary fines
Earlier this year, the Prince Edward Island Office of the Superintendent of Securities granted IIROC the legal authority to collect disciplinary fines directly through the Supreme Court of PEI. On March 31, the Ontario government announced its intention to introduce legislative amendments to give IIROC the ability to pursue the collection of disciplinary fines directly through the courts.
"We appreciate the ongoing support of our regulatory and government partners in our quest to strengthen our enforcement abilities and to ensure a consistent level of investor protection across Canada," said IIROC President and CEO Andrew J. Kriegler.
"IIROC is urging other provincial governments to make similar legislative changes so investors can be confident that investment firms and individuals will comply with IIROC's regulatory rules and we can improve the effectiveness of our investigations and prosecutions bringing wrongdoers to justice."