FAIR Canada provided comments in response to IIROC's consultation to expand its portfolio of Enforcement Options to include a Minor Contravention Program ("MCP") and the use of Early Resolution Offers ("EROs") as set out in IIROC Notice 18-0045 dated February 22, 2018. FAIR Canada supports IIROC in reviewing the effectiveness of its enforcement program in order to better fulfil its mandate of protecting investors and supporting healthy capital markets across Canada.
FAIR Canada believes it is difficult to meaningfully review and assess the effectiveness of enforcement and the current proposal to add an MCP and EROs in the absence of core data. FAIR Canada recommends that key information or data be provided annually in the Enforcement Report and that the information be consistently reported each year. We recommend that IIROC provide a discussion of enforcement toolkit options it considered in a future IIROC Notice on this issue.
Furthermore, the IIROC Notice indicates that Staff reviewed its practices and comparable programs and approaches adopted by securities and other regulatory bodies. However, the Notice only provides a comparison of minor violation programs in other jurisdictions (not other jurisdiction's early resolution programs), chooses only selected jurisdictions (rather than providing robust information on all major jurisdictions and whether they have an MCP or not), and does not provide any commentary on their effectiveness. There is also no explanation as to why certain jurisdictions were chosen while others were not and why Staff chose to include several regulators that oversee exchanges rather than regulators that oversee investment dealers and their representatives.
FAIR Canada articulated that it would also be helpful to assess the efficiencies to be gained by the proposed MCP and EROs by providing information regarding the length of time on average for IIROC to process cases to the different stages of the enforcement process, how efficiencies would be gained and how fairness/proportionality would be enhanced. Moreover, fairness and proportionality must be assessed not simply vis a vis the firm or individual who is sanctioned but also vis a vis the investors or the integrity and fairness of our markets as a result of losses incurred or other harms that result from the misbehaviour and malfeasance.
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