IIROC and unpaid fines Part 11: Time to give it the power in Ontario to collect from those who leave the industry

If Andrew Kriegler, president and ceo from the Investment Industry Regulatory Organization of Canada, has his way, Ontario will be the next province, after Alberta and Quebec, to give its regulators the power to gather fines levied on rule breakers once they leave an investment industry.

In an exhibition to the province’s standing committee on finance and economic affairs last month, Kriegler asked for the committee’s “support for two legislative measures which will permit IIROC to better protect Ontario’s investors and support healthy capital markets in the province.”

Specifically Kriegler wanted support for an amendment towards the Securities Act that would permit IIROC to better collect fines in Ontario. “Such an amendment will give us the ability to enforce hearing panel sanctions through the Ontario Superior Court of Justice,” he explained in prepared remarks.

And when the committee has any sense it will offer the request. The main reason: IIROC isn’t that successful in collecting fines that are levied on participants. In a report prepared by March 4, almost $28 million remains uncollected from 158 individual decisions C about $180,000 per individual.

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“Our collection rate for fines owing by disciplined individuals is under 20 per cent across Canada. This really is unacceptable,” said Kriegler. In the current fiscal year, the gathering rate in Ontario “is only 2 percent. Moreover, Ontario represents 61 percent of the amount of remarkable fines on a national basis in this fiscal year,” he said.



Part from the issue is that in Ontario, IIROC has no capability to collect once the registrant has left the company “regardless of what they’ve done, or how much cash they owe.   This really is wrong. Should you break the guidelines and abuse the believe in clients have placed in you, you have to pay the penalty and be seen to pay it,” he said.

Meanwhile, as expected, IIROC’s collection rates in Alberta and Quebec are considerably greater than its national rate.

So far IIROC has produced numerous reports on unpaid fines. The very first, in April 2014, showed that $23.848 million have been levied on 117 individuals and unpaid C to have an average of almost $204,000. Another report was prepared in January 2015, which showed $25.554 million owing from 130 individuals C to have an average of $196,569. Compared with the April 2014 numbers, 17 individuals were put into the list and four were removed.

Earlier this week another report was launched which showed $27.9 million of unpaid fines with 26 individuals being put into their email list compared with the prior report.

The data shows that the popularity is going within the wrong direction: the unpaid fines total keeps increasing, as does the number of individuals on the list.

For Ontario the choice to grant IIROC the ability it requested ought to be a no-brainer. A fast scan of a few of the offences committed by the individuals reveals some rather serious transgressions: on a single case the individual didn’t observe high standards of ethics and conduct within the transaction of his business;” in another the individual “engaged in misleading and deceptive trading activity;” other people “misappropriated” money from a client; while other people prepared “fictitious portfolio statements to two sets of clients.”

Try and pull those stunts in the local Mac’s Milk and find out what goes on: There’d be no chance that the offending parties would be walking around as though nothing happened.