Content area
Full Text
Introduction
The IDA (since 2008, the Investment Industry Regulatory Organization of Canada [IIROC]) is the national self-regulatory organization (SRO) that is responsible for policing investment dealers and Member firms that trade in the debt and equity markets in Canada (Jenah, 2008, pp. 1-4). IIROC sets educational requirements, ethical standards and compliance rules that govern the conduct of its registered members and Member firms (Jenah, 2007, pp. 2, 8, and 15). Registered members and Member firms must comply with these rules, or face penalties that range from a written reprimand to permanent bans from participating in the market (IIROC, 2008, p. 4). IIROC’s nine District Councils across Canada are responsible for enforcing these rules (IIROC, 2010, para. 1).
An overview of the problem
Public criticisms of the IDA being lenient on its members are well documented. One of the harshest critics of the IDA, Vancouver Sun columnist David Baines, argues “that the financial penalties” imposed by the IDA are “grossly inadequate” (Baines, 2006, para. 3). In one example, an IDA Member firm and its three principals engaged in “persistent compliance breaches”, yet neither the Member firm nor the principals “were suspended for a single day. All they had to do was pay $1,775,000 in fines, and they were back in good standing” (para. 2). Others note:
[…] a widespread perception that the IDA is not impartial in its policing of the brokerage industry and that the penalties imposed on firms and their employees are often too lenient (Howlett, 2003, para. 7).
A task force commissioned by the Ontario Securities Commission in 2001, found that:[…] many do not perceive the IDA to be responsive to retail investors. It is seen as a trade association catering more to the interests of its members than to the interests of investors (Ontario Securities Commission, 2003, p. 8,157; also see Ojo, 2011, p. 142).
Other problems with the enforcement arm of the IDA pertain to the manner in which complaints are resolved:A review of IDA disciplinary actions by The Vancouver Sun shows that, in the four years and five months since [an] earlier audit [covering the period from August 1995 to July 1996], the IDA has not held a single contested hearing and has assessed only one suspension...