IIROC to publish names of those who fail to pay fines

The report notes that, while it collected 98% of the monetary penalties assessed against firms in 2013, only 10.5% of the penalties ordered against individuals were collected. Starting next month, IIROC says that it will begin publishing the names of individuals that fail to pay their fines, in order to enhance the transparency of IIROC’s collection rate. The list will be posted on IIROC’s website and will be updated on a quarterly basis.

In the meantime, the report also spells out the regulator’s efforts to improve collections in the past year. It notes that it has acquired legislative authority in Quebec, similar to what it has in Alberta, allowing to have disciplinary decisions entered as court judgments, which is expected to facilitate collection. It also took one former registrant to court in Ontario in order to enforce a costs award through an action for breach of contract, thereby establishing an important precedent for the regulator. The court ruled in IIROC’s favour, and upheld the decision on appeal, meaning that it “now has the legal authority to enforce the payment of cost orders made in other IIROC disciplinary matters.”

Additionally, during the year, the regulator notes that it consolidated its enforcement rules for dealers and markets, and revised its sanctioning guidelines. “This year we pursued important policy initiatives designed to refine our processes and improve our effectiveness through rule changes and revised sanction guidelines,” said Paul Riccardi, senior vice president, member regulation at IIROC. “We continue to dedicate IIROC’s enforcement resources to actively prosecute wrongdoers and to focus on harmful behaviours that warrant enforcement action.”

In terms of enforcement stats, the report indicates that IIROC initiated 200 investigations in 2013, and successfully prosecuted 45 individuals and 12 firms during the year, resulting in five firms being suspended or terminated, 25 individual suspensions, and, permanent bars against eight individuals. It also imposed fines of nearly $4.4 million against individuals and $2.2 million against firms. These totals tend to fluctuate greatly from year to year and are often skewed by a handful of major cases. In 2013, fines against firms jumped by more than 60%, whereas monetary sanctions against individuals dropped to less than half of the total in 2012.

IIROC notes that seniors, and other vulnerable investors, continue to represent a large portion of its enforcement activity. In 2013, approximately 37% of complaints reviewed by IIROC involved seniors, it says, and approximately 40% of prosecutions against individuals related to misconduct against seniors. “The vast majority of cases involving seniors dealt with suitability violations relating to the risk profile of an investment itself and/or the improper use of leverage,” the report notes.