Last week the Investment Industry Regulatory Organization of Canada (IIROC) released its 2021 enforcement report, emphasizing the importance of supervision, internal controls and the leverage of advanced technologies by IIROC-regulated firms. Highlights of the report include the following:
- An overall 9% increase in complaints received by IIROC in FY21 compared to the same period a year earlier
- Of all complaints received, suitability represented 30% of all cases, while supervisory issues accounted for 13%
- Compared to the previous four years, the number of completed investigations referred for prosecution fell sharply to 25%, down from a high of 46% in FY18
- Of completed investigations, FY21 had the largest percentage of fines imposed against firms (versus individuals) in the past four fiscal years
- Supervision ranked first as the most common reason for disciplinary action against firms, while failure to keep suitable records did not register a single action over the course of the year
- Total fines and disgorgement actions taken against firms amounted to $1.2M, nearly 33% higher than any fiscal year since FY18
Analysis: regulators expect firms to stay vigilant on compliance
Like the actions taken by FINRA in the U.S., the most recent enforcement year reflected fewer regulatory enforcement actions, but the average of each fine and disgorgement action increased. Themes of market suitability, supervisory failures, and outside business activities all share the common spotlight as those noted by FINRA.
Translation into IIROC priorities for fiscal year 2022 has already taken shape. The regulatory organization has noted the need for firms to inspect existing processes and the use of technologies that are equally effective in an era of hybrid workforces and virtual branch inspections.
Author: Marianna Shafir Esq. Regulatory Advisor at Smarsh
About the author
Marianna is responsible for regulatory affairs worldwide. With her expertise in financial services industry, compliance and e-discovery, Marianna counsels Smarsh clients on meeting regulatory obligations, leveraging technology and guidance on best practices related to electronic communications supervision. Prior to joining Smarsh, Marianna worked for BNY Mellon and Invesco where she was an instrumental member on compliance teams.Marianna has also served as an adjunct professor at New York Career Institute where she taught Law Office Management and Real Estate Law. She earned her Juris Doctorate from Nova Southeastern University. She is a frequent speaker at industry conferences and a contributor to various online publications.
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