IIROC enforcement ended on a high as disciplinary activity rose in 2022

In its final year before being consigned to the dustbin of regulatory history with the launch of a new SRO, the Investment Industry Regulatory Organization of Canada (IIROC) went out on a high, according to the latest enforcement data.

For 2022, IIROC reported an increase in complaints, disciplinary case volumes and sanctions imposed on both industry firms and reps.

The number of reports to IIROC’s Complaints and Settlement Reporting System (ComSet) jumped by 46.8% during the year to 1,540 in 2022 from 1,049 in 2021.

In particular, client complaints jumped from 823 in 2021 to 1,201 last year. The number of civil claims filed during the year almost doubled from 112 in 2021 to 209 in 2022.

The number of case assessment files opened in 2022 rose by about 37% to 383 from 279 in the previous year — back to the same level as 2020. And, as of the end of the year, there were still 112 open cases.

The top issue involved in the cases opened in 2022 (representing 839 allegations in total) was suitability, with about 100 allegations of unsuitable investments. Unauthorized trading allegations were next, followed by alleged complaint-handling violations.

Amid the increase in case volumes, the number of investigations completed by IIROC last year also increased by about 22% year over year from 76 in 2021 to 93 last year (although this was still down from the 119 investigations completed in 2020).

The volume of disciplinary proceedings (against both firms and reps) that were completed also increased, rising from 25 in 2021 to 37 in 2022.

The bulk of the increase came in proceedings against firms, which jumped from just five in 2021 to 13 cases last year.

Total monetary sanctions against firms also rose to $1.45 million in 2022, up from $1.13 million in 2021.

The number of cases and sanctions involving reps also rose year over year. There were 24 decisions against reps in 2022, up from 20 in 2021. These generated $13.7 million in total sanctions, up from $1.4 million in 2021 and just $937,401 in 2020.

The fines levied against reps last year soared to $7.9 million from $938,000 in 2021 and $781,500 in 2020, and disgorgement orders also spiked to over $5 million from less than $200,000 in 2021. Cost orders more than doubled to $694,022 in 2022.

Non-monetary sanctions — including permanent bans (five in 2022 up from two in 2021), suspensions (13 up from 12) and conditions being placed on reps’ registrations (10 in 2022, versus nine in 2021) — also increased last year, the data showed.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.