Request for Comment – Enforcement Alternative Forms of Disciplinary Action 

Date opened: February 22, 2018

Date closed: May 13, 2018

Status: Closed

Summary/details:

As part of IIROC’s Three-Year Strategic Plan, IIROC adopted an objective to expand our portfolio of Enforcement Options to help us address wrongdoing in a fair and proportionate manner in order to inspire confidence and deter wrongdoing by having and using robust and appropriate tools. To further this objective, Enforcement Staff are considering two proposals to provide for alternative forms of disciplinary action. The proposals would allow for more tailored enforcement responses and ensure enforcement actions are fair and proportionate to the particular circumstances of cases under investigation.  In addition, Staff believe these proposals will create operational and procedural efficiencies by promoting more timely resolution of certain cases while also freeing up resources needed for larger and more complex cases.

  1. A new Minor Contravention Program (MCP) under which an Approved Person or Dealer Member would agree to the imposition of a sanction for rule contraventions that are deemed minor.  The MCP would provide a more efficient means to resolve cases that cannot be adequately addressed by way of a Cautionary Letter but do not warrant formal disciplinary action.
  2. The use of Early Resolution Offers to conclude settlement agreements at an earlier point in the enforcement process to promote the efficient resolution of cases, increase the application of the IIROC Staff Policy Statement on Credit for Cooperation,1 and encourage firms to take remedial measures and address investor harm through voluntary acts of compensation.  

In developing these proposals, Staff has reviewed its practices and comparable programs and approaches adopted by securities and other regulatory bodies.  By providing the option for more tailored responses, Staff believes these proposals will assist in deterring wrongdoing in a fair and proportionate manner.

IIROC stakeholders are encouraged to review and comment on the proposals.  To supplement and engage a broader representation of stakeholders, IIROC will consult directly with Canadian investors to get their views on the proposed alternative forms of disciplinary action. In our current Strategic Plan, IIROC committed to actively consulting with retail investors on key policy issues.  To do so, we established an online pool of 10,000 Canadian investors, from which we would consult on key proposals to better understand their needs, experiences and perceptions.  We will draw on a subset of this pool to solicit input on this proposal from retail investors coast to coast. 

Following the close of the 90-day comment period, Staff intends to draft a consolidated response to the written comments received and, where appropriate, revise the proposals to address the comments received.  We also intend to publish the results of the investor survey. Staff may also consider inviting those who submit comments to a meeting with Staff to discuss issues related to the adoption and implementation of the proposals.

Staff anticipates that implementation of the MCP will require amendments to the IIROC Consolidated Enforcement, Examination and Approval Rules (the Consolidated Rules).  Any proposed amendments will be published for further public comment before implementation.

Notices about this consultation: