​During the Case Assessment process, each matter is considered to determine if we have sufficient evidence of a breach of IIROC's rules that warrants disciplinary action.

Many IIROC enforcement actions begin with an investor complaint. IIROC also receives referrals from the investment firms themselves, other IIROC departments, other regulators in Canada or internationally, as well as police agencies in Canada and abroad.

Every complaint that IIROC receives is reviewed by staff, who will respond to indicate what the next steps will be. IIROC staff can take a range of actions. Not all complaints will proceed to an investigation. IIROC may pursue other courses of action, including issuing a warning letter to the firm or individual in question or referring the case to other regulatory or police authorities.

In cases where we decide not to proceed with disciplinary action, IIROC can help complainants explore other options for addressing their concerns.

If Case Assessment’s initial review indicates that further investigation is warranted, the matter is referred to investigation staff to begin a formal investigation.
In addition, formal investigations may be undertaken on the basis of a direct referral from another IIROC department, a request from a securities commission or other regulatory organization, or any other information received by IIROC.

• For the purpose of any examination or investigation, IIROC-approved or registered individuals and regulated firms, when asked by IIROC staff, are obligated to do the following:
• Submit a report in writing with regard to any matter involved in an investigation;
• Produce for inspection and provide copies of the books, records and accounts relevant to the matters being investigated; and
• Attend and give information respecting any such matters.

Investigations are conducted by an investigator in collaboration with Enforcement counsel. Part of the investigation usually includes interviews of the complainant and any other witnesses such as supervisors, support staff, compliance staff or anyone else who might have knowledge about the complaint or matter under investigation. Analysts assist the investigators by examining relevant information including account documentation and by producing a variety of reports and demonstrative evidence for use in the investigation and a potential hearing. The investigator and Enforcement counsel then review the findings of the investigation and make a recommendation as to whether there is evidence that a breach of IIROC’s rules has occurred.

In all cases, investigators and counsel will also assess supervisory controls and whether supervision by a dealer firm of an individual was adequate. If not, an investigation for supervisory failure could be instigated.

If matters are outside the scope of IIROC, they may be referred to the police, a securities commission or another regulatory organization. IIROC reports complaints to the appropriate law enforcement agency where there appears to be evidence of criminal activity. Individuals or firms who are the subject of an investigation may retain counsel to assist them during the investigation.

 

Once it has been determined that there has been a breach of IIROC rules that warrants formal disciplinary action, Enforcement staff will prepare the matter for a formal hearing.
A Notice of Hearing will be drafted that sets out, among other things, the time and date of the hearing and the specific allegations against the individual or firm. The Notice of Hearing is then served on everyone named in the Notice as a respondent.

The Notice of Hearing is then filed with IIROC's National Hearing Coordinator (NHC). The NHC administers all proceedings at IIROC. The NHC receives and distributes to the Hearing Panel materials filed by the parties, sets hearing dates and performs other administrative functions.

Once a respondent is served with the Notice of Hearing, the respondent must respond within either 20 or 30 days, depending on whether the case is on the Standard or the Complex Track (this will be indicated on the Notice of Hearing itself). The response must set out the facts in the Notice of Hearing to which the respondent admits, the facts that the respondent denies and the reasons for denying them, and set out all of the other facts that the respondent wishes to rely upon in defence of the allegations. Failure to deliver a response may result in findings being made against the respondent and penalties being imposed without further notice.

Before the formal hearing begins, both sides must exchange documents that they intend to rely upon at the hearing, as well as witness statements and any reports by experts who might be called as witnesses.

A pre-hearing conference may be held before the actual hearing takes place. A pre-hearing conference is held before a Presiding Officer who cannot later sit on the hearing panel that will decide the case at the formal hearing unless all parties consent in writing.

The purpose of a pre-hearing conference is to encourage the parties to settle or agree upon as many issues as possible such as concerns over the disclosure of documents or other information, witness scheduling, hearing dates and other matters that will help the parties to expedite the hearing process. The parties also discuss whether the entire case can be settled or resolved without proceeding to a contested hearing. Everything discussed at a pre-hearing conference is privileged and confidential, which means that it cannot later be referred to or used in any way against any of the parties.