It presumably wasn’t intended to be this way but two recent reports from the regulators reveal different amounts of performance.
There was the report issued Monday by the Ontario Securities Commission, noting an increase in enforcement activity this past year with 31 cases commenced compared with 22 in 2014.
And there is the discharge from IIROC – the organization that oversees all investment dealers and their debt and equity trading activity – referred to as unpaid fines report.
As of March 4 the regulator had levied $27.9 million in fines, which in fact had not been collected. That data, relates to individuals who have “not paid the full quantity of an excellent, disgorgement, and/or costs order imposed because 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 fits to be an average uncollected fine of just about $200,000. The list may include individuals who have “received a bankruptcy discharge after the order being made.”
The fines vary from a low of $5,000 to a a lot of $5.03 million. In four cases the fines were above $1 million. The IIROC data details the person being fined, the quantity of the fined and, via a click-through, the institution that employed the individual.
There is a wide 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 to 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 to which employers compensated the clients for such activities.
The current report may be the second from IIROC, using the first coming in June 2014.
In that report IIROC noted that in 2013 it collected 98.1 per cent from the monetary penalties assessed against firms and 10.5 percent from the penalties assessed against individuals. In which to stay the company, both firms and individuals have to pay the fines which are levied.
So what’s to become done? Because of the quantity of unpaid fines, it’s tough to argue the present product is working. Considering that employed in the financial business is a privilege, an acceptable starting place would be to make it harder for entrants to get involved with the business at all, part of an agenda to require higher standards both academic and professional.
And when the individual is part of the system, make the advisers try to an even higher standard, namely fiduciary duty which means that they act solely within the client’s needs. Discussion about this matter has dragged on and on for years.
Another way is for that regulators to insist employers have the effect of the behaviour of the employees they undertake – whether or not the employees regard themselves as independent contractors. Accordingly, by making it harder to get involved with the company, by insisting that they the act to a higher standard, there is a chance, but no guarantee, there will be better outcomes.
In two provinces, Alberta and Quebec, IIROC will go after individuals once they leave the industry – an electrical it said hello has utilized occasionally. It wants Ontario regulators to have the same power.
Of course clients have some responsibility: in the end it’s their money.
bcritchley@nationalpost.com
