Nova Scotia has become the third province to grant one of Canada’s investment regulators greater investigative power in a bid to strengthen protections for investors, including the authority to use the courts to enforce its fines against individuals found guilty of misconduct.
A 2017 Globe and Mail investigation found that the amount of unpaid securities fines in Canada is more than $1.1-billion.
The province recently passed legislative amendments to its securities act to provide the Investment Industry Regulatory Organization of Canada with the legal authority in Nova Scotia to more effectively investigate and prosecute those who harm investors.
With the changes, Nova Scotia becomes the third province to give IIROC greater investigative power, joining Alberta and Quebec.
"Together, we are giving potential wrongdoers notice that if they break the rules, there will be consequences,” IIROC’s president and chief executive Andrew Kriegler said in a statement.
IIROC was formed by the securities industry, and oversees about 160 investment dealers and their trading activity in Canada’s debt and equity markets. It investigates and prosecutes firms and investment advisers that breach its rules. Such infractions could include misappropriating funds from clients, signing documents on behalf of clients without their knowledge or making unsuitable recommendations to investors – frequently seniors and vulnerable people, for whom the financial losses can be significant.
Across Canada in 2017, cases involving seniors represented almost 40 per cent of all IIROC reviews and approximately 30 per cent of prosecutions.
Now, IIROC will have the ability in Nova Scotia to enforce fine collection against individuals that engage in misconduct, to collect and present evidence during investigations and at disciplinary hearings; and be protected from malicious lawsuits while it conducts its work.
To date, IIROC has authority to enforce fine collection in seven provinces: Nova Scotia, Prince Edward Island, Quebec, Ontario, Manitoba, Alberta and British Columbia.
Since 2008, IIROC has issued more than $43.5-million in sanctions against individuals across the country. As of March, 2017, the regulator had collected just more than $8.8-million, leaving about $34-million in unpaid fines.
As a result of the legislative amendments, IIROC has seen Alberta and Quebec collection rates increase. For the period between 2008 and 2016, the collection rate of fines in Alberta was 26 per cent, while 36 per cent of fines have been collected in Quebec – both of which are well above the national average.
IIROC continues to be in discussions with other jurisdictions with plans “to achieve a consistent level of investor protection from coast to coast,” the regulator said.
Clare O’Hara