CIRO drops harmonized sanctions guidance

The Canadian Investment Regulatory Organization (CIRO) is taking another step toward integrating its investment dealer and mutual fund dealer arms into a single industry self-regulatory organization with the release of harmonized guidance on enforcement sanctions and other disciplinary policies.

CIRO’s new sanctions guidance, which takes effect on Feb. 1, will replace the previous guidance that was in place under its predecessors, the Mutual Fund Dealers Association of Canada (MFDA) and the Investment Industry Regulatory Organization of Canada (IIROC).

The SRO said the single set of guidance, which will be used to guide hearing panels, CIRO enforcement staff, and targets of disciplinary action in determining sanctions in both settlements and contested hearings, is designed to “reinforce consistency, fairness and transparency in the sanctioning process.”

The guidance covers basic principles, such as the expectation that sanctions be preventative, not punitive; that violators shouldn’t be able to benefit financially from their misconduct; and that repeat offenders should be treated more severely.

It also sets out a list of 20 factors that will be considered in setting sanctions, such as the extent of harm caused by the misconduct, whether there was a pattern of misbehaviour, whether the victims were vulnerable, and whether there have been efforts to repay victims, among numerous other considerations.

Alongside the unified guidance on sanctions, the SRO released policy statements that set its approach to providing credit for cooperation in disciplinary cases, establish a 30% discount on sanctions for cases that resolve quickly, and detail how internal discipline will be factored in to the SRO’s enforcement.

It also clarified that its enforcement staff generally won’t ask for suspensions of longer than five years unless the misconduct involved deserves a permanent ban.

“These initiatives are another further step towards becoming one unified CIRO, demonstrating our commitment to upholding the highest standards of practice and business conduct among its dealer members and regulated individuals,” said Elsa Renzella, senior vice-president, enforcement and registration with CIRO, in a release.

“By introducing these sanctions and enforcement policies, CIRO reaffirms its commitment to enhancing investor protection, strengthening market integrity, and ensuring efficient, competitive capital markets in Canada,” she said.

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.