How unpaid fines are adding up for IIROC

It presumably wasn’t intended to be this way but two recent reports from the regulators reveal different levels of performance.

There was the report issued Monday by the Ontario Securities Commission, noting an increase in enforcement activity last year with 31 cases commenced compared with 22 in 2014.

And there is the discharge from IIROC – the business that oversees all investment dealers and their debt and equity trading activity – known as the unpaid fines report.

As of March 4 the regulator had levied $27.9 million in fines, which had not been collected. That data, pertains to individuals who have “not paid the full quantity of an excellent, disgorgement, and/or costs order imposed as a result of enforcement proceedings before an IIROC Hearing Panel.”

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The data covers the time October 2008 to January 2016. In most IIROC has not collected fines from 144 individuals C which works to be a typical uncollected fine of just about $200,000. The list can include individuals who have “received a personal bankruptcy discharge subsequent to an order being made.”

The fines range from a low of $5,000 to some a lot of $5.03 million. In four cases the fines were above $1 million. The IIROC data details the person being fined, the amount of the fined and, via a click-through, the institution that employed the person.

There is really a broad range of firms from all parts of the country on that list and there is some rather depressing reading in every situation, including misappropriating client funds; providing fictitious account documents towards the client; forging signatures; unauthorized purchases; and engaging in personal financial dealings having a client without disclosing and obtaining prior approval from one’s employer. It’s not known the extent that employers compensated the clients for such activities.



The current report is the second from IIROC, using the first coming in June 2014. 

In that relate IIROC noted that in 2013 it collected 98.1 per cent of the monetary penalties assessed against firms and 10.5 percent of the penalties assessed against individuals. To stay in the company, both firms and people have to pay the fines which are levied.

So what’s to become done? Because of the amount of unpaid fines, it’s tough to argue the current product is working. Given that working in the financial business is a privilege, a reasonable starting point is always to allow it to be harder for entrants to get into the company whatsoever, part of a plan to want higher standards both academic and professional.

And when the person is part of the system, result in the advisers try to a level higher standard, namely fiduciary duty meaning they act solely within the client’s needs. Discussion about that matter has dragged on and on for years.

Another strategy is for the regulators to insist employers are responsible for the behaviour from the employees they undertake – whether or not the employees regard themselves as independent contractors. Accordingly, by looking into making it harder to get involved with the business, by insisting that they the act to some higher standard, there’s a chance, but no guarantee, there will improve outcomes.

In two provinces, Alberta and Quebec, IIROC can go after individuals once they leave the industry  – an electrical it said it has utilized occasionally. It wants Ontario regulators to have the same power.

Of course clients possess some responsibility: after all it’s their money.

bcritchley@nationalpost.com