On April 25, 2019, the Investment Industry Regulatory Organization of Canada (IIROC) published Rule Notice and Request for Comment 19-0076, (the rule notice and request for comment) for a period ending July 24, 2019, regarding two proposed alternative forms of disciplinary action.

The two proposed alternative forms of disciplinary action, the Minor Contravention Program (MCP) and the Early Resolution Offers, were proposed as amendments to IIROC’s Consolidated Enforcement, Examination, and Approval Rules (the Consolidated Rules).  They were first published on February 22, 2018, in Notice 18-0045 (the February Notice).

  • Minor Contravention Program: According to IIROC staff, the MCP would allow IIROC to deal with contraventions that fall between a cautionary letter and a formal disciplinary proceeding. IIROC staff believe that the MCP highlights the importance of progressive discipline and ensures enforcement outcomes are proportionate to the contravention yet provide adequate deterrence. Based on stakeholder feedback from the Notice, IIROC staff made a series of amendments (the amendments), which it is now asking for comment on.
  • The Early Resolution Offers: In the current settlement regime, enforcement cases may only be resolved by entering into a settlement agreement subject to approval by a hearing panel. Settlement agreements are typically reached after an investigation by staff and extensive negotiations between IIROC staff and the respondent. By contrast, the proposed Early Settlement Offer would represent IIROC’s best settlement offer by granting a reduction of 30% on the sanctions that would be ordinarily imposed.  IIROC staff believe that the use of Early Resolution Offers would promote the timely resolution of cases, increase the application of the Staff Policy Statement on Credit for Cooperation and encourage Dealers to implement timely compensation and remedial measures.

Rule Notice and Request for Comment 19-0076 can be found on the website of the Investment Industry Regulatory Organization of Canada.

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.