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IIROC Guide to Enforcement Proceedings



This Guide is intended for anyone involved in an IIROC disciplinary proceeding for information purposes only and is not intended as legal advice. This Guide will be of assistance with respect to proceedings commenced after September 1, 2016.

 

  1. What is IIROC?

  2. What is an IIROC disciplinary proceeding?

  3. How is an IIROC disciplinary proceeding conducted?

  4. How is a disciplinary proceeding started?

  5. Is the hearing public?

  6. What is the role of the National Hearing Coordinator?

  7. Who will be the decision-maker in my hearing?

  8. Do I need a lawyer to represent me in a hearing?

  9. Where will a hearing take place?

  10. What costs might I incur in a hearing?

  11. What if I want to settle?

  12. What is "disclosure"?

  13. What is a Pre-Hearing Conference?

  14. Do I need to call witnesses at a hearing?

  15. What do I need to do to prepare for a hearing?

  16. Is the hearing recorded?

  17. What happens at the hearing?

  18. What if I cannot make the date set for the hearing?

  19. What if I choose not to attend the hearing?

  20. When will the Hearing Panel make its decision?

  21. What information about the hearing is published on the internet?

  22. Can I appeal an IIROC hearing decision?

 


 

1. What is IIROC?

 

The Investment Industry Regulatory Organization of Canada (IIROC) is the national self-regulatory organization which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada.

 

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2. What is an IIROC disciplinary proceeding?

 

IIROC investigates and initiates disciplinary proceedings to determine whether there has been a breach of IIROC Rules (Dealer Member Rules, the Universal Market Integrity Rules or Consolidated Enforcement, Examination and Approval Rules), securities legislation, or other requirements relating to trading or advising in respect of securities, commodities contracts or derivatives.

 

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3. How is an IIROC disciplinary proceeding conducted?

 

The rules that govern IIROC disciplinary proceedings are found in Rules 8200 through 8400 (referred to as the Rules of Practice and Procedure) of the Consolidated Enforcement, Examination and Approval Rules (the “Consolidated Rules”).

 

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4. How is a disciplinary proceeding started?

 

In order to start a disciplinary proceeding, Enforcement Staff must serve a Notice of Hearing and a Statement of Allegations on a Respondent. There may be more than one Respondent named in a Notice of Hearing and Statement of Allegations. A Respondent can be an individual IIROC Approved Person or an IIROC Dealer Member firm.

The Notice of Hearing and Statement of Allegations set out, among other things, the time and date of the hearing and the specific allegations that will be considered by the Hearing Panel.

Once filed with the National Hearing Coordinator (“NHC”), the Notice of Hearing and Statement of Allegations are published on IIROC’s website.

A first hearing is held to determine whether the allegations in the Notice of Hearing and Statement of Allegations have been proven (the “Merits Hearing”). If any of the allegations are proven then a second hearing is generally scheduled to determine the appropriate penalty (the “Sanction Hearing”).

 

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5. Is the hearing public?

 

Generally, IIROC hearings are open to the public and to the media, subject to the exceptions set out in Section 8203(5).

 

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6. What is the role of the National Hearing Coordinator?

 

The NHC is an employee of IIROC, but is independent of Enforcement Staff. Section 8407 describes the duties of the NHC. The NHC administers the hearing process and acts as the liaison between the parties and the hearing panel.

Parties should not attempt to communicate directly with the hearing panel outside of the hearing room. Any communications between the parties and the hearing panel which take place outside of the hearing room should be routed through the NHC.

The NHC is unable to give legal advice to any party.

 

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7. Who will be the decision-maker in my hearing?

 

The decision makers in an IIROC hearing are referred to collectively as the Hearing Panel.

The Rules require that the Hearing Panel be made up of one public chair (generally a retired judge or lawyer) and two industry members (either active or retired). The Hearing Panel members are independent and unbiased and decide the matter based only on the evidence that is put before them.

The Rules also require that, with certain exceptions, the Hearing Panel members should reside in the province where the hearing is taking place.

 

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8. Do I need a lawyer to represent me in a hearing?

 

You may choose to be represented by a lawyer. You may also choose to be represented by a paralegal or agent, where permitted by law in your province.

If you are represented by a lawyer, a paralegal or an agent, Enforcement Staff and the NHC will only be permitted to communicate with you through your lawyer, paralegal or agent.

 

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9. Where will a hearing take place?

 

A hearing may take place in IIROC’s offices or in another location chosen by the NHC.

The Hearing Panel members sit at a table at the front of the room facing forward. The parties sit at tables beside each other facing the Hearing Panel. If a witness will be testifying, there will also be a place for him or her to sit where everyone can see and hear them. There will also be seats at the back of the room for members of the public.

You will be notified in advance of the location and time of the hearing by the NHC.

 

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10. What costs might I incur in a hearing?

 

If you choose to retain a lawyer or a paralegal or an agent, you will be required to bear those costs.

If you file any documents or other materials during the hearing, multiple copies of the documents or materials must be provided to Enforcement Staff and the NHC in advance. You are responsible for the cost of preparing those copies.

If Enforcement Staff is successful in proving any of its allegations at the conclusion of a hearing, under section 8214, a hearing panel may order a Respondent to pay any costs incurred by or on behalf of IIROC in connection with the hearing and any investigation related to the hearing.

 

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11. What if I want to settle?

 

You may discuss the settlement of your case with Enforcement Staff at any time. A settlement will require you to admit to a breach or breaches of IIROC Rules and to agree to a sanction.

If all parties agree on a settlement, a settlement agreement must be accepted by a Hearing Panel. A settlement hearing is held where the settlement agreement is presented to the Hearing Panel.

A settlement hearing is not public unless and until the Hearing Panel accepts the settlement agreement. If the Hearing Panel does not accept the settlement agreement, then neither the settlement agreement nor the hearing panel’s decision becomes public.

If the settlement agreement is accepted by the Hearing Panel, the settlement agreement, together with the Hearing Panel’s written decision and reasons will be published on the IIROC website.

 

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12. What is "disclosure"?

 

A Respondent to a disciplinary proceeding is entitled to procedural fairness. This entitlement includes a right to know the case to be met in order to make full answer and defence to the allegations. In addition to being advised of the allegations that he or she faces in the Notice of Hearing and Statement of Allegations, a Respondent is entitled to receive “disclosure” of certain information in the possession of Enforcement Staff.

After a Respondent has filed a written response to Enforcement Staff’s Notice of Hearing and Statement of Allegations, Enforcement Staff must disclose all documents and things in Enforcement Staff’s possession or control that are relevant to the proceeding, with certain exceptions (i.e., privileged documents). Enforcement Staff’s disclosure obligations are set out in Section 8417.

 

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13. What is a Pre-Hearing Conference?

 

A pre-hearing conference is a non-public meeting between members of the Hearing Panel and the parties. All parties must attend a pre-hearing conference. Section 8416 describes how to request and prepare for a pre-hearing conference, and sets out what can be discussed at a pre-hearing conference.

A pre-hearing conference can be used as an opportunity to discuss the settlement of a case or to set or amend a timetable for the steps to take place before a hearing is held.

 

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14. Do I need to call witnesses at a hearing?

 

Section 8203 states that a hearing panel may admit or require evidence to be presented under oath or affirmation. Evidence can be the oral testimony of a witness, as well as documents or other materials such as audio recordings, and video recording.

If you want to present evidence at the hearing, you may choose to call witnesses (including yourself). If you are calling a witness to testify, you may want to provide them with a summons. A summons is a document ordering a person to appear before the hearing panel to testify. It sets out the place, date and time of the hearing. To request a summons, contact the NHC to obtain the necessary form. There are limits on who can be summonsed to an IIROC hearing – see section 8421.

If you are going to call a witness(es), Section 8418 sets out the requirements for witness lists (a list of the names of the witnesses you will be calling) and witness statements (a summary of what the witnesses will say at the hearing). You must send copies of your witness list and statement(s) to Enforcement Staff and to the NHC. Enforcement Staff are also required to send these documents to you.

Section 8419 sets out the requirements if you wish to call an expert as a witness in your hearing.

 

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15. What do I need to do to prepare for a hearing?

 

In addition to considering what witnesses, if any, you want to call at your hearing, you should also consider what documents, if any, you wish to rely on at the hearing. Section 8417 sets out the requirement and corresponding deadlines for each party to provide copies in advance of all of the documents that they intend to rely on at the hearing.

 

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16. Is the hearing recorded?

 

Yes. A certified court reporter is present at every hearing. You may choose to order a transcript of the hearing after it is concluded (at your own cost).

If a hearing was held in public, any member of the public can request copies of the exhibit(s) and transcript(s) of the hearing, subject to the Policy Regarding Use and Disclosure of Personal Information in IIROC Disciplinary Proceedings and/or any order made by the Hearing Panel.

 

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17. What happens at the hearing?

 

Section 8423 sets out the order in which a hearing must be conducted. Generally, the order is:

  1. Enforcement Staff make an opening address;

  2. The Respondent may choose to make an opening address right away, or may choose to wait;

  3. Enforcement Staff presents its evidence and examines its witnesses;

  4. The Respondent may cross-examine each of Enforcement Staff’s witnesses;

  5. The Respondent may choose to make an opening address at this time;

  6. The Respondent presents its evidence and examines its witnesses;

  7. Enforcement Staff may cross-examine each of the Respondent’s witnesses;

  8. Enforcement Staff may present evidence in reply;

  9. If the Hearing Panel permits it, the parties may serve and file submissions in writing on the facts and legal argument;

  10. Enforcement Staff may make closing submissions;

  11. The Respondent may make closing submissions; and

  12. Enforcement Staff may reply to any new issues raised by the Respondent.

 

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18. What if I cannot make the date set for the hearing?

 

Section 8422 sets out the process to request an adjournment (re-scheduling) of a hearing from the Hearing Panel. Such requests should be made as early as possible. You must attend the hearing on the original hearing date unless the Hearing Panel has granted an adjournment.

If you want to request an adjournment, you must contact the NHC and ask to schedule a motion for an adjournment before the Hearing Panel. In order to bring a motion, you will need to complete the Motion Date Request form and send it to the NHC and to Enforcement Staff..

 

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19. What if I choose not to attend the hearing?

 

Enforcement Staff may ask to proceed with the hearing even if you are not there, provided that you have been properly provided with the Notice of Hearing and Statement of Allegations. Sections 8415 and 8423(12) set out the circumstances in which a Hearing Panel may order that the hearing proceed in the absence of a Respondent.

 

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20. When will the Hearing Panel make its decision?

 

The Hearing Panel may make its decision at the conclusion of the hearing, or may reserve its decision and send it to the parties together with its reasons for that decision at a later date. The NHC sends copies of all written decisions and reasons for decision to the parties. You should always ensure that the NHC has your current contact information to ensure that you receive any communications from the Hearing Panel. If you are represented by a lawyer, a paralegal or an agent, the NHC will send the decision to that person, and not directly to you.

 

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21. What information about the hearing is published on the internet?

 

IIROC issues a news release to announce hearing dates and hearing results, including reasons for decision. These news releases are then posted to the IIROC website.

As noted above, Notices of Hearing, Statements of Allegations and hearing decisions are also posted to IIROC’s website.

 

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22. Can I appeal an IIROC hearing decision?

 

Yes. IIROC decisions can be appealed to the relevant provincial securities authority. You should consult the securities legislation in your province to determine the proper procedure to launch an appeal and take note of any applicable deadlines.

Strict time limits (usually 30 days from the date of the decision) usually apply for filing a request with the securities authority to have an IIROC hearing panel decision reviewed.

 

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