The Investment Industry Regulatory Organization of Canada (IIROC) has published proposed amendments to rules for reporting internal investigations and client complaints to the regulator. For dealers, IIROC says the amendments make internal investigation and reporting requirements clearer.

Specifically, the proposed amendments affect reporting and internal investigation requirements and client complaint requirements set out in IIROC Rule 3700. They also address gatekeeper obligations of directors, officers and employees discussed in UMIR (Universal Market Integrity Rules) Rule 10.16.

“These proposed amendments make IIROC reporting, internal investigation and client complaint requirements clearer and more consistent with existing regulatory expectations, (they) reduce duplicative reporting to IIROC by eliminating overlapping reporting requirements and enhance client complaint requirements by codifying client complaint handling best practices,” IIROC states. The amendments also include changes to IIROC’s Rule 9500 to allow the Ombudsman for Banking Services and Investments to share information with the regulator.

The proposed amendments go on to say the changes will address inconsistencies in how dealers interpret the regulator’s requirements. “The proposed amendments do not involve a rule that IIROC, dealers or approved persons must comply with in order to be exempted from a requirement of securities legislation,” they add.

“Our current ComSet reporting requirements are generally prescriptive in nature,” the document continues. “As a result, dealers are not consistently reporting to us or conducting investigations on all matters where there is risk of material harm to clients or the capital markets.” 

The amendments introduce new definitions outlining serious misconduct – infractions range from outside business activities to money laundering and theft – and they introduce new timelines for reporting violations and investigations to the regulator. 

Notably, some requirements which previously only applied to approved persons, are now being extended to matters involving employees, as well. Specifically, under the proposed amendments, dealers would be required to report if employees engaged in serious misconduct, if they are the subject of a client complaint or if they are subject to any criminal offense, disciplinary action or civil claim.

“Dealers would be required to conduct an internal investigation when they become aware that an employee may have engaged in serious misconduct, and report to us when they become aware of a complaint where a client alleges an employee has engaged in serious client-related misconduct,” they write. 

The comment period to provide feedback on the proposed amendments closes April 14, 2022.