IIROC seeks greater enforcement powers in Ontario

“I am seeking the committee’s support for two legislative measures, which will permit IIROC to better protect Ontario’s investors and support healthy capital markets in the province,” he said, “measures which would do so at no material cost to government or taxpayers.”

IIROC wants the ability to enforce its hearing panel penalty decisions through the courts. Although the SRO typically collects monetary penalties that are levied against firms, it collects less than 20% of what’s owed by individuals on a national basis, Kriegler reported. The situation in Ontario is particularly bleak, he noted, as IIROC has only collected 2% of the total levied so far in the current fiscal year.

Moreover, IIROC has accumulated more than $20 million since 2008 in uncollected sanctions in Ontario, he said: “Money that IIROC would use to better protect investors, fund the administration of disciplinary hearing panels and support investor education.”

The collection rates for Alberta and Quebec, where IIROC already has the power to enforce collections through the courts, are much higher than they are in Ontario, Kriegler stressed. Yet, more than half of IIROC’s enforcement activity comes from Ontario. In 2015, the province accounted for 78 of 124 of completed investigations nationally; furthermore, it accounts for 61% of total outstanding fines on a national basis.

“This is wrong. If you break the rules and abuse the trust your clients have placed in you, you must pay the penalty and be seen to pay it,” he said.

To help address this problem, IIROC wants a legislative amendment that would give it the power to enforce hearing panel sanctions through the Ontario Superior Court of Justice.

“Such an enforcement tool would send a strong and credible message of deterrence and would advance IIROC’s public interest mandate,” Kriegler said. “It would also foster investor confidence in the regulatory system and it would do so at no material cost to government or taxpayers.”

IIROC is also seeking statutory immunity for its staff to protect them from the risk of civil lawsuits for carrying out their duty in good faith, Kriegler noted: “IIROC and its staff, including our disciplinary hearing adjudicators, are potentially exposed to legal action by individuals or entities that are not regulated by IIROC, based on regulatory actions taken or regulatory powers exercised in the course of IIROC’s carrying out its public interest mandate — even when those actions are taken in good faith.”

The SRO has long sought the same sort of statutory protection for its staff that the staff of a provincial regulator, such as the Ontario Securities Commission (OSC), has under securities law.

“Under this proposal, when we perform a regulatory function at the behest of the OSC, we would have the same immunity as that afforded to the OSC, were it to perform the function itself,” he said. “This would allow IIROC directors, officers, employees and disciplinary hearing adjudicators to act in the public interest without fear of lawsuits related to their regulatory role.”

Finally, Kriegler also reiterated IIROC’s support for regulating financial planning, but cautioned against creating any new regulators to do the job.

“We strongly believe there is need for regulation of financial planning,” he said. “We caution however that … there is already significant regulatory fragmentation. It is not in the public interest to create yet another financial regulator. To do so would only lead to further consumer confusion, duplication, cost and regulatory gaps.”

Instead, Kriegler said that “Ontario should make use of its existing regulators to supervise financial planners operating in their respective jurisdictions, but mandate that they work together and that they move to a common set of standards and discipline.”