The Canadian Securities Administrators (CSA) has provided guidance to firms seeking to engage the services of compliance consultants (Consultants) following a regulatory decision. CSA Staff Notice 31-356, Guidance on Compliance Consultants (The Staff Notice) defines the scope and role of compliance consultants.
In detail, the purpose of the Staff Notice is to:
- help firms identify, evaluate and engage appropriate Consultants to assist them to effectively address their compliance deficiencies on a timely basis, as CSA staff do not endorse or recommend any Consultants;
- provide transparency on the CSA staff’s process and criteria for approving or accepting a Consultant proposed by a firm; and,
- inform Consultants and firms about the CSA staff’s expectations for a Consultant’s engagement, including their role, and the format and content for reporting improve the oversight and remediation processes of Firms subject to a Regulatory Decision by increasing their consistency, efficiency and effectiveness.
As defined by CSA staff, a Consultant may be a lawyer, public accountant, experienced compliance professional, former securities regulator, management or risk consultant, experienced industry person, or some combination of these roles. Their role is to provide professional advice and services in respect of compliance with securities law, relevant industry rules, industry best practices, and development of systems regarding controls and supervision. The regulator has final approval over the hiring of the Consultant by the firm.
A Consultant is typically engaged by a firm following a regulatory action by CSA staff, a decision by a director, or as a result of a compliance order following an investigation by a regulator, where significant non-compliance with securities law has been identified. If the firm in question is required to bring a consultant on board, it could be as a result of terms and conditions placed on the firm’s registration; an order that the firm submit to a review of its practices and procedures; or, an order approving a settlement agreement with the firm, all of which create a requirement under securities law.
CSA Staff Notice 31-356, Guidance on Compliance Consultants is available for download from the websites of participating jurisdictions.
For more information, please call Barbara Hendrickson at BAX Securities Law (416) 601 -1004.
This publication is not intended to constitute legal advice. No one should act on it or refrain from acting on it without consulting with a lawyer. BAX does not warrant or guarantee the accuracy or currency or completeness of the publication. No part of this publication may be reproduced without the prior written permission of BAX Securities Law.