The Canadian Securities Administrators (CSA) have demanded that the Investment Industry Regulatory Organization of Canada (IIROC) boost business conduct compliance activities after the CSA noted serious deficiencies in multiple consecutive oversight reviews. In an Oversight Review Report on IIROC published July 4, 2017 (Report), CSA flagged ‘Business Conduct Compliance’ as a high priority area requiring immediate action. This public censure will likely result in stricter enforcement of IIROC dealer members.
The Report comes out of an oversight review of IIROC conducted by staff of seven provincial securities regulators, covering a period from April 1, 2015 to July 31, 2016. The purpose of the review was to assess whether the selected regulatory processes of IIROC were “effective, efficient, and applied consistently and fairly, and whether IIROC complied with the terms and conditions of the [CSA members’] recognition orders.” The Report also evaluated whether recommendations in the previous Oversight Review Report published on March 3, 2016 (covering the year before the period addressed by the current Report) (Previous Report) had been dealt with satisfactorily. The Report categorized deficiencies as high, medium, or low priority. High priority items “will result in IIROC not meeting its mandate” and require IIROC to “immediately put in place an action plan,” the implementation of which is to be directly monitored by the CSA.