If Andrew Kriegler, president and ceo of the Investment Industry Regulatory Organization of Canada, has his way, Ontario would be the next province, after Alberta and Quebec, to provide its regulators the power to collect 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 recently, Kriegler asked for the committee’s “support for 2 legislative measures which will permit IIROC to higher protect Ontario’s investors and support healthy capital markets in the province.”
Specifically Kriegler wanted support for an amendment to the Securities Act that will permit IIROC to more effectively collect fines in Ontario. “Such an amendment would give us the ability to enforce hearing panel sanctions with the Ontario Superior Court of Justice,” he said in prepared remarks.
And if the committee has sense at all it will support the request. The main reason: IIROC isn’t that successful in collecting fines which are levied on participants. Inside 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 per cent. Moreover, Ontario represents 61 percent of the total amount of remarkable fines on a national basis within this fiscal year,” he said.
Part from the problem is that in Ontario, IIROC doesn’t have ability to collect when the registrant leaves the business “regardless of the items they’ve done, or how much cash they owe. This really is wrong. If you break the guidelines and abuse the believe in clients have put into you, you must pay the penalty and be seen to pay for 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 first, in April 2014, showed that $23.848 million had been levied on 117 individuals and unpaid C for an average of just about $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. In contrast to the April 2014 numbers, 17 individuals were added to the list and four were removed.
Earlier now another report was launched which showed $27.9 million of unpaid fines with 26 individuals being added to the list compared with the prior report.
The data shows that the popularity is going in the wrong direction: the unpaid fines total keeps increasing, as does the amount of individuals on the list.
For Ontario the decision to grant IIROC the ability it requested ought to be a no-brainer. A fast scan of a few of the offences committed through the individuals reveals some rather serious transgressions: on one case the person failed to observe high standards of ethics and conduct within the transaction of his business;” in another the person “engaged in misleading and deceptive trading activity;” another individual “misappropriated” money from the client; while another individual prepared “fictitious portfolio statements to 2 teams of clients.”
Try and pull those stunts in the local Mac’s Milk and find out what happens: There would be absolutely no way the offending parties could be travelling as if nothing happened.
