For the Canadian Investment Regulatory Organization (CIRO), investor complaint volumes eased in fiscal 2024, as did the volume of enforcement activity.
The industry self-regulatory organization (SRO) published its annual enforcement report on Tuesday, which showed overall declines in the number of enforcement decisions handed down during the year and in total monetary sanctions.
The SRO reported that its hearing panels imposed over $14 million in fines, disgorgement and costs orders in the latest fiscal year — down from about $23 million combined in the previous year.
The decline in total monetary sanctions was driven by cases involving investment dealer representatives, in which total sanctions dropped from $14.7 million in fiscal 2023 to $4.1 million in fiscal 2024.
Sanctions imposed against investment dealer firms jumped from just over $1 million in 2023 to almost $5.5 million.
Total sanctions against fund dealer reps were also down, from over $6.0 million last year to $4.5 million this year. Sanctions against fund dealer firms dropped from $1.4 million in 2023 to less than $400,000 in fiscal 2024.
The SRO also reported its collection rate for sanctions against individuals was up to 15% in 2024 from 10% the previous year. CIRO typically collects 100% of the sanctions imposed on firms; in fiscal 2024, the regulator’s collection rate for sanctions against firms was 94%, but only because some fines are being paid in instalments, the report said.
In addition to the monetary sanctions, CIRO noted that suspensions and permanent prohibitions were imposed in a “significant proportion” of the enforcement proceedings against individual reps in fiscal 2024.
“These sanctions demonstrate that the impact of our proceedings is significant and that we are targeting our resources to the most significant cases with the most deterrent value,” the SRO said in the report.
Alongside the drop in monetary sanctions, the volume of enforcement decisions declined year over year, from 108 in 2023 to 75 cases in fiscal 2024. The decline was driven by a drop in the number of cases involving fund reps, which was down from 71 last year to 43 this year.
The number of decisions against fund dealer firms was also down from six last year to just one. However, the total volume of decisions on the investment dealer side was stable at 31 (as the number of decisions against firms fell from 11 to nine, but the number involving individuals ticked up to 22 from 20).
The decline in the volume of enforcement activity came against the backdrop of a decline in investor complaints too.
According to the report, in 2024, CIRO received 1,421 complaints involving investment dealers, down from 1,563 the previous year. On the fund dealer side, the volume of complaints was down from 2,541 in fiscal 2023 to 1,987.
On both sides of the industry, complaints involving suitability issues led the way, followed by allegations of unapproved discretionary trading and supervisory issues.
“As in past years, we are focused on improving our timeliness in bringing forward cases without compromising fairness or effectiveness,” the regulator said. “Our view is that, the closer in time a case can be brought to the misconduct at issue, the greater impact and deterrent value it will have.”
Additionally, the SRO made strides at consolidating its enforcement functions during the past year. Among other things, it adopted a new centralized case intake process and implemented harmonized guidance on sanctions. It has also started work on consolidating the enforcement systems of the predecessor SROs.
“This year’s report reflects our unwavering commitment to protecting investors and enhancing market integrity amidst the challenges of regulatory evolution,” said Elsa Renzella, senior vice-president, enforcement and registration with CIRO, in a release.
“We have made substantial progress in streamlining and modernizing regulatory systems, unifying enforcement decision-making, and improving industry standards,” she said. “This ensures we focus our finite resources on cases that have the greatest deterrent impact and the strongest regulatory message.”