10.5 Suspension or Restriction of Access

    1. If the Market Regulator has determined that a Subject Person, other than a marketplace for which the Market Regulator is or was the regulation services provider, has engaged in, or may engage in, any course of conduct that is or may be a contravention of a Requirement, the Market Regulator may, if the Market Regulator considers it is necessary for the protection of the public interest by an interim order without notice or hearing, order the restriction or suspension of access to the marketplace upon such terms and conditions, if any, considered appropriate provided such interim order shall expire 15 days after the date on which the interim order is made unless:
      1. a hearing is commenced pursuant to Rule 8200 (Enforcement Proceedings) within that period of time to confirm or set aside the interim order;
      2. the person against which the interim order is made consents to an extension of the interim order until a hearing of the matter is held; or
      3. an applicable securities regulatory authority directs that the interim order be rescinded or extended. 
    2. For the purposes of this section, the restriction, suspension or revocation of access of a person to a marketplace may be imposed directly on the person and, if the person is an individual, the restriction, suspension or revocation of access may also be imposed in respect of their capacity as a director, officer, partner, employee or associate of a person with access to a marketplace.
    3. For greater certainty, any enforcement or disciplinary proceeding or any order or interim order as against a person by a Market Regulator for contravention of a Requirement shall not affect or limit any enforcement or disciplinary action as against the person by any securities regulatory authority, self-regulatory entity or other Market Regulator with jurisdiction over the person.
    4. If a Market Regulator restricts, suspends or revokes the access of any person to a marketplace in accordance with this section, such person shall be denied access to any other marketplace and shall have any access to any other marketplace automatically restricted, suspended or revoked unless the applicable securities regulatory authority otherwise determines in a review or appeal of the order or interim order of the Market Regulator undertaken in accordance with Rule 11.3.
    5. If a Market Regulator restricts, suspends or revokes the access of any person to a marketplace, the Market Regulator shall provide notice forthwith of such restriction, suspension or revocation to:
      1. the person whose access has been restricted, suspended or revoked;
      2. each marketplace;
      3. each Market Regulator; and
      4. each applicable securities regulatory authority.

    Defined Terms:

    NI 14 101 section 1.1(3) – “securities regulatory authority”

    NI 21-101 section 1.1 – “regulation services provider” and “self-regulatory entity”

    UMIR section 1.1 – “employee”, “Market Regulator”, “marketplace”, “Subject Person” and “Requirements”

    UMIR section 1.2(2) – “person”

     

    There are no related Guidance/Notice documents available for this Rule.

    Regulatory History:

    Effective September 1, 2016, the applicable securities commissions approved amendments to Rule 10.5 which include the repeal of subsection (1) as it will be replaced by the consolidated rule 8209. See IIROC Notice 16-0122“Implementation of the consolidated IIROC Enforcement, Examination and Approval Rules” (June 9, 2016).

    Disciplinary Proceedings: In the Matter of Global Securities Corporation (“Global”) (June 20, 2003) Decision 2003-004

    Facts – Between May 1, 1997 and January 31, 1998, Global failed to diligently supervise its employees.  The Committee found that the infractions alleged against Global were proven.  A number of prior settlement agreements approved by either the Alberta Stock Exchange or the Vancouver Stock Exchange which had been place before a prior committee of the TSX Venture Exchange where not approved.  The only issue before the current Committee was the appropriateness of the penalty to be levied against Global. 

    Held - The fact that Global suffered a loss of approximately $1.7 million as a result of the conduct of the investment advisors was not in the view of the Committee a factor of significant weight.  In considering an appropriate penalty, the Committee looked at earlier unrelated settlement agreements.

    Comparable UMIR Provision – Rule 10.5 

    Sanction - $135,000 fine and costs of $12,000; disgorgement of $4,330 in profits

    Disciplinary Proceedings: In the Matter of Global Securities Corporation (“Global”), Robert Semple (“Semple”), Robert Tassone (“Tassone”) and Bruce McConnachie (“McConnachie”) (January 5, 2004) Decision 2004-001

    Facts - Between November 1994 and August 1996, Semple and Tassone, while approved persons at Global failed to ensure that their recommendations were suitable for their clients and also provided advice respecting options trading without being qualified.  McConnachie, who was the Branch Manager, failed to diligently supervise the trading that was carried out by Semple and Tassone in the clients’ accounts.  Semple and Tassone repaid all of the commissions and losses, with interest and penalty, to the clients, and have been placed under strict supervision for a period of seven years.  They have also paid significant legal fees in connection with the related civil action launched by the clients.  Based on the above, they submit that they should not have to pay the additional fines levied by the Canadian Venture Exchange.

    Held – In light of the adverse impact of being under strict supervision, damage to their reputations, and other factors which Tassone and Semple have suffered as a result of this matter, the Panel ordered that the sanctions imposed on both men be reduced.  Due to unrelated personal matters affecting McConnachie, his fine was also reduced.

    Comparable UMIR Provision – Rule 10.5

    Sanction – 

    1. Semple - $15,000 fine and costs of $10,000; successful rewrite of the Conduct and    Practices Handbook examination
    2. Tassone - $10,000 fine and costs of $10,000; successful rewrite of the Conduct and Practices Handbook examination
    3. McConnachie - $20,000 fine and costs of $5,000; successful rewrite of the Branch    Manager’s Examination
    There is no history log for this rule.
    Part 1 - Definitions and Interpretation
    Part 2 - Abusive Trading
    Part 3 - Short Selling
    Part 4 - Frontrunning
    Part 5 - Best Execution Obligation
    Part 6 - Order Entry and Exposure
    Part 7 - Trading in a Marketplace
    Part 8 - Principal Trading
    Part 9 - Trading Halts, Delays and Suspensions
    Part 10 - Compliance
    Part 11 - Administration of UMIR