IIROC wants power to collect fines

By Andrew Rickard | February 03 2016 01:37PM

Andrew Kriegler, IIROC's president and CEO.

The Investment Industry Regulatory Organization of Canada (IIROC) gives out a lot of fines, but in Ontario it collects relatively few of the ones levied against individuals. The regulator wants the law changed so that it can enforce its decisions in the province. It also wants to have immunity when performing its regulatory duties.

As part of the Ontario government's pre-budget consultations, IIROC made a presentation to the province’s Standing Committee on Finance and Economic Affairs on Feb. 1. IIROC's president and CEO Andrew Kriegler made a point of saying that he was not asking for any fiscal or funding measure to be included in this year’s Ontario Budget. Instead, the regulator wants legislative changes that will allow it to collect more of the fines it hands out.

In his comments, Kriegler admitted that there are currently more than $20 million in outstanding fines against individuals, and that IIROC's collection rate in Ontario for fines imposed so far during this fiscal year is only 2%.

Rate for fines less than 20% across Canada

"IIROC collects 100% of the fines levied against firms that have broken the rules, but many individuals evade payment – you can see their names on our web site. Our collection rate for fines owing by disciplined individuals is less than 20% across Canada. This is unacceptable. It is true, sometimes these individuals have no assets, but individual rule-breakers often evade payment by simply ceasing to be an IIROC registrant,” he explained

What is the main reason behind this poor collection rate? While the governments of Alberta and Quebec have given IIROC the authority to collect fines against individuals in their provincial Securities Acts, it has no ability to do so in Ontario.

"We are pursuing an amendment to the Securities Act to permit IIROC to more effectively collect fines in Ontario. Such an amendment would give us the ability to enforce hearing panel sanctions through the Ontario Superior Court of Justice. Such an enforcement tool would send a strong and credible message of deterrence and would advance IIROC’s public interest mandate. It would also foster investor confidence in the regulatory system and it would do so at no material cost to government or taxpayers," argued Kriegler.

IIROC is potentially exposed to legal action

What’s more, IIROC and its staff are potentially exposed to legal action; as the law stands today they can be sued by individuals and firms for exercising the regulatory functions they have been assigned by the Ontario Securities Commission (OSC), even when these functions are conducted in good faith.

"So I am here to also pursue the addition of an immunity provision to the Securities Act for the good faith performance of our regulatory functions – but only in respect of the responsibilities assigned to us under the Securities Act or by our OSC recognition order. Under this proposal, when we perform a regulatory function at the behest of the OSC, we would have the same immunity as that afforded to the OSC, were it to perform the function itself," said Kriegler. 

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