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Category Archives: Compliance and Supervision

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Credit for Cooperation: The Alberta Securities Commission Sets Out Parameters for Cooperation

Posted in Compliance and Supervision, Enforcement

The Alberta Securities Commission (the “ASC”) recently released the Credit For Exemplary Cooperation in Enforcement Matters policy (the “ASC Policy”). It joins the provinces of Ontario and British Columbia in encouraging persons and companies to self-report securities related misconduct and breaches of securities laws. The purpose of the ASC Policy is to explain the benefits of cooperating with the securities regulator and the factors the ASC will consider when granting credit for exemplary cooperation. Historically, securities regulators have faced difficulties in detecting securities related misconduct, and as such, regulators have come to see the merits in … Continue Reading

Targeted Reforms Update – Most regulators abandon the “Best Interest Standard” but propose to proceed with refined “Targeted Reforms”

Posted in Advisors, Amendments, Broker-Dealers, Compliance and Supervision, CSA, IIROC, Industry News, MFDA, OSC, Registrants

The Canadian Securities Administrators (CSA) issued CSA Staff Notice 33-319 (the Notice) to provide an update on the “Best Interest Standard” and “Targeted Reforms” proposed last year in an important CSA Consultation Paper that we discussed in a previous post.

Most regulators have decided to abandon the Best Interest Standard which would have introduced a “client best interest” standard against which all registrant-client obligations would be interpreted.

The CSA will still proceed with a refined set of Targeted Reforms. Even in the absence of a Best Interest Standard in most jurisdictions, the Targeted Reforms would nonetheless … Continue Reading

CSA Sets Out Priorities for 2016-2019

Posted in Advisors, Broker-Dealers, Compliance and Supervision, Continuous and Timely Disclosure, CSA, Enforcement, Exempt Market Dealers, Investment Funds, Mutual Funds, Registrants

The Canadian Securities Administrators (CSA) published on July 7, 2016 their priorities for the three-year period 2016 to 2019 under four categories: “Enhanced Investor Protection”, “Fair and Efficient Markets and Reduction of Risks to Market Integrity”, “Enhancement of Enforcement Effectiveness” and “Enhancement of Information Technology”.

The CSA states its strategic objectives without once mentioning the possible impact on it of the proposed national Cooperative Capital Markets Regulatory Authority (CCMRA) some of its members support. On July 22, it was announced that the CCMRA is expected to be operational in 2018.

Enhanced Investor Protection

The CSA proposes to … Continue Reading

Les propositions des ACVM concernant les personnes inscrites ont des effets très importants sur les courtiers et les conseillers au Canada

Posted in Advisors, Amendments, Broker-Dealers, Compliance and Supervision, CSA, IIROC, Industry News, MFDA, Registrants, Requests for Comment

Les Autorités canadiennes en valeurs mobilières (les ACVM) ont publié un important document de consultation dans lequel il est proposé de rehausser considérablement les obligations de tous les conseillers, courtiers et représentants, y compris les membres de l’OCRCVM et de l’ACFM (les personnes inscrites). Les commentaires sur ce document de consultation peuvent être présentés jusqu’au 26 août.… Continue Reading

CSA Registrant Proposals Have Far-Reaching Effects on Dealers and Advisers in Canada

Posted in Advisors, Amendments, Broker-Dealers, Compliance and Supervision, CSA, IIROC, Industry News, MFDA, Registrants, Requests for Comment

Recently, the Canadian Securities Administrators (CSA) released an important Consultation Paper that proposes to significantly increase the obligations of all advisers, dealers and representatives, including IIROC and MFDA members (Registrants). Comments on the Consultation Paper can be made until August 26.

The CSA is proposing two distinct categories of changes that, if adopted, will significantly impact the economics of existing Registrant business models and Registrant compliance costs:

1. Best Interest Standard: A “client best interest” standard against which all Registrant-client obligations would be interpreted.

2. “Targeted Reforms”: A comprehensive set of so-called “targeted reforms” will affect … Continue Reading

OSC Sets Out Priorities for 2016-2017

Posted in Advisors, Broker-Dealers, Compliance and Supervision, Enforcement, Exempt Market Dealers, Mutual Funds, OSC, Registrants

The Ontario Securities Commission (OSC) released its draft Statement of Priorities for 2016-2017. The comment period ends May 9th.

Investor Protection Priorities

Advance Best Interest Standard – The OSC will recommend and conduct consultations on regulatory provisions to create a “best interest” standard for advisors. This standard is controversial for some industry participants but the OSC is committed to it. The OSC will also  continue to focus on advisor compensation practices and identify those that are inconsistent with a “best interest” standard.

Compensation Arrangements in Mutual Funds – The OSC will regulate embedded commissions and … Continue Reading

IIROC Announces Dealer Sweep on Compensation-Related Conflicts

Posted in Broker-Dealers, Compliance and Supervision, CSA, IIROC, Industry News, Marketplaces, Registrants, Uncategorized

On April 6, IIROC published Notice 16-0068 – Managing Conflicts in the Best Interest of the Client (the 2016 IIROC Notice). IIROC intends to strengthen compliance by Dealer Members (DMs) with IIROC’s conflicts of interest rules, with a particular focus on the management of compensation-related conflicts.

Specifically, IIROC announced that it will take the following actions:

  1. Immediately enhance its compliance test procedures to more closely examine compensation grids, supervisory oversight of advisors recommending products with high commissions, and the monitoring of advisors approaching compensation thresholds;
  2. By June 2016, conduct a comprehensive survey to gather more detailed information
Continue Reading

IIROC 2016 Compliance Priorities

Posted in Broker-Dealers, Compliance and Supervision, IIROC, Registrants

The Investment Industry Regulatory Organization of Canada (“IIROC”) is Canada’s self-regulatory organization that overseas investment dealers and equity market places. In its 2016 statement of key compliance priorities, IIROC sets out its ongoing efforts to strengthen the culture of compliance among dealer members (“DMs”).

As in prior years, IIROC’s focus will be on taking action against DMs that fail to address significant compliance findings and/or fail to demonstrate a commitment to the development of a strong compliance culture. In addition, IIROC will, through its new Consolidated Enforcement Rules (expected to come into force in 2016), have the ability to … Continue Reading

OSC Proposes Higher Financial Awards for Whistleblowers

Posted in Amendments, Compliance and Supervision, Enforcement, Industry News, OSC, Proposals, Registrants, Requests for Comment, SEC, Uncategorized

The OSC is close to adopting a proposed final version of its previously-announced whistleblowing policy (the Program). The Program would award eligible whistleblowers up to $5 million for reporting serious securities- or derivatives-related misconduct that leads to significant enforcement or settlement outcomes.

We summarized the original OSC consultation paper in a previous article. The OSC received comments on the consultation paper and also hosted a stakeholder roundtable on the proposals. Reporting issuers will want to re-examine their internal compliance and reporting systems, codes of conduct and employment agreements in light of the proposed program. Key features are summarized … Continue Reading

Disclosure Watch: CSA Increases Number of Continuous Disclosure Reviews

Posted in Capital Markets, Compliance and Supervision, Continuous and Timely Disclosure, CSA

On July 16, 2015, the Canadian Securities Administrators (CSA) published the summary of the results of their annual continuous disclosure (CD) review program of reporting issuers (other than investment funds) for issuers with a fiscal year end of March 31, 2015 in CSA Staff Notice 51-344 – Continuous Disclosure Review Program Activities for the fiscal year ended March 31, 2015 (Staff Notice).… Continue Reading

Le glossaire

Posted in Advisors, Compliance and Supervision, Conformité et supervision, Conseillers en placement, IIROC, OCRCVM

De plus en plus, les clients ont des attentes marquées et précises à l’égard de leur conseiller.

Entre autres, on s’attend du conseiller qu’il soit professionnel, compétent et qu’il respecte les plus hautes normes d’éthique.

L’OCRCVM, en mettant de l’avant le modèle de relation client-conseiller, a tracé la voie sur l’importance et la priorité du client, la transparence dont doivent faire preuve les firmes et la divulgation claire des conflits d’intérêts.

On constate également que depuis plusieurs années, les produits et services financiers sont nombreux. Certains produits sont opaques et leur structure complexe. Un client peut facilement s’y perdre ou … Continue Reading

IIROC’s New Policy Regarding Personal Information in Disciplinary Proceedings Takes Effect on May 1, 2015

Posted in Compliance and Supervision, Conformité et supervision, IIROC

The policy provides guidance relative to the use and disclosure of personal information in proceedings brought pursuant to Rule 20 of the IIROC Dealer Member Rules and Part 10 of the Universal Market Integrity Rules (UMIR). This policy will replace IIROC’s “Policy on Requests for Access to Disciplinary Hearing and Settlement Hearing Records”.

New Requirements

The new policy requires the redaction of specific personal information that is enumerated in the policy from documents filed with the National Hearing Coordinator or with an IIROC Hearing Panel. The policy also limits public access to the hearing record to the redacted record.

The … Continue Reading

New OSC Fee Rules Come into Effect April 6

Posted in Amendments, Compliance and Supervision, Industry News, OSC, Registrants

Effective April 6, the OSC is implementing amendments to OSC Rule 13-502 – Fees (the “New Rule”). While largely consistent with the basic framework under the previous version of the fee rule (the “Old Rule”), the New Rule changes the basis for the calculation of participation fees by removing the use of a “reference fiscal year”, introduces nominal increases to certain activity fees, and introduces new management certification requirements for participation fee forms.

Participation Fees

The two main types of fees charged under the Old Rule are participation fees and activity fees. Participation fees are set … Continue Reading

Ce qu’implique un règlement – 2ème partie

Posted in Compliance and Supervision, Conformité et supervision, Enforcement, IIROC, Litige en valeurs mobilières, OCRCVM, Securities Litigation, Uncategorized

Vous êtes aux prises avec une plainte disciplinaire d’un organisme d’autoréglementation, plus particulièrement l’Organisme canadien de règlementation du commerce des valeurs mobilières (OCRCVM). Vous êtes à regarder vos options dont, entre autres, celle de procéder à un règlement avec l’OCRCVM.

Lors d’un premier article nous avons traité du processus de fonctionnement du règlement. Nous avons également vu qu’il n’était pas possible de régler une faute ou un manquement.

Alors quel est l’avantage d’une entente de règlement?

L’avantage du règlement est d’abord d’éviter la tenue d’une audition devant une formation d’instruction, laquelle déterminera dans un premier temps s’il y a culpabilité … Continue Reading

Mutual Fund Compensation and Reinvestment Practices Face OSC Scrutiny

Posted in Compliance and Supervision, Continuous and Timely Disclosure, Investment Funds, Mutual Funds, OSC, Portfolio Managers

The OSC recently published its 2014 Summary Report for Investment Fund and Structured Product Issuers which includes, among other topics, a summary of key OSC policy initiatives affecting investment fund issuers and highlights of 2014 continuous disclosure and compliance reviews of investment funds The report also sets out OSC Staff observations on key emerging issues and trends for mutual funds.

OSC criticizes reinvestment of distributions by “default”

Some mutual funds offer a choice between making distributions to investors in cash, or in the form of reinvested units. OSC Staff is concerned about mutual funds that set the payment of distributions … Continue Reading

Ce qu’implique un réglement

Posted in Compliance and Supervision, Conformité et supervision, Enforcement, IIROC, Litige en valeurs mobilières, OCRCVM, Securities Litigation, Uncategorized

Vous êtes aux prises avec une plainte disciplinaire d’un organisme d’autoréglementation (« OAR »), plus particulièrement de l’Organisme canadien de réglementation du commerce des valeurs mobilières (« OCRCVM »). Vous êtes à regarder vos options dont, entre autres, celle de procéder à un règlement avec l’OCRCVM, de ladite plainte disciplinaire, cela soulève plusieurs questions :

  • Comment fonctionne le processus de règlement?
  • Peut-on régler sans reconnaître de faute?
  • Peut-on régler de façon confidentielle?

Dans ce premier article, nous allons répondre à ces trois questions. Dans un article subséquent, nous répondrons à d’autres questions qui peuvent être soulevées dans le cadre d’un … Continue Reading

On Market Manipulation – the case of Thalbinder Singh Poonian et al., 2014 BCSECCOM 318

Posted in AMF, Compliance and Supervision, Conformité et supervision, Jurisprudence, Litigation, Marketplaces

In the fall of 2014, a British Columbia Securities Commission Panel considered whether five B.C. residents (the Respondents) had engaged in market manipulation of the shares of OSE Corp. (OSE), an Ontario company listed on the TSX Venture Exchange.

In Thalbinder Singh Poonian et al., 2014 BCSECCOM 318, the Panel found that the Respondents and certain relatives, friends and associates (Secondary Participants) acquired a dominant share position of OSE and manipulated OSE’s share prices by trading through brokerage and nominee accounts. They also sold shares to unsuspecting clients of the Phoenix Group and its affiliates, where Phoenix and … Continue Reading

OSC Proposes Large Financial Awards for Whistleblowers

Posted in Compliance and Supervision, Enforcement, Industry News, OSC, Proposals, Registrants, Requests for Comment, SEC

The Ontario Securities Commission (OSC) is inviting comment for the next 90 days on a proposed comprehensive whistleblowing program (the Program) which would award eligible whistleblowers up to $1.5 million for reporting securities law misconduct that leads to significant enforcement or settlement orders.

Yesterday, the OSC published a consultation paper outlining the key features of the proposed whistleblowing program and seeking public input on various aspects of the proposals. During the next 90 days, the OSC will be accepting comments on the consultation paper and will host a roundtable with various stakeholders to discuss the proposals. Before … Continue Reading

Les pouvoirs de l’AMF

Posted in AMF, Compliance and Supervision, Conformité et supervision, Enforcement, Jurisprudence, Litigation, Litige en valeurs mobilières

Dans l’arrêt Autorité des marchés financiers (l’ « AMF ») c. SNC-Lavalin inc.[1] (« SNC »), la Cour d’appel du Québec a traité de l’aspect de la confidentialité et du huis clos des enquêtes de l’AMF.

Dans le cadre d’une enquête menée par l’AMF, cette dernière a requis d’un dirigeant de SNC qu’il communique certains documents, le tout assujetti d’une ordonnance l’empêchant de communiquer à quiconque toute information reliée à l’enquête, dont son existence, sa nature et les renseignements demandés, conformément à l’article 245 de la Loi sur les valeurs mobilières.

Cette ordonnance est par la suite modifiée, … Continue Reading

Les obligations d’information*

Posted in Compliance and Supervision, Conformité et supervision, Continuous and Timely Disclosure, Obligations d'information continue

Des obligations d’information ont été mises en place sur les marchés des capitaux pour que la communication de l’information auprès du public se fasse de façon périodique et continue. L’objectif en est un de transparence : l’on vise un accès équitable à l’information importante afin d’assurer une stabilité des marchés et de maintenir la confiance des investisseurs.

Conformément à la Loi sur les valeurs mobilières, un émetteur assujetti qui a fait appel public à l’épargne est tenu à des obligations d’information continue.

L’information continue se compose entre autres de l’information périodique au sujet des activités et des affaires internes … Continue Reading

L’éthique toujours au rendez-vous*

Posted in Advisors, Compliance and Supervision, Conformité et supervision, Conseillers en placement

« Quand vous cherchez des gens à recruter, vous devez rechercher trois qualités : l’intégrité, l’intelligence et l’énergie. Et s’ils ne possèdent pas la première, les deux autres vous tueront. »

Warren Buffet

L’intégrité et l’éthique sont des manières d’agir. Dans le secteur financier et le domaine des valeurs mobilières, ces manières d’agir prennent un rôle clé puisqu’elles inspirent la confiance, une notion qui est au cœur de la relation avec son client.

Plusieurs firmes ont mis en place des codes d’éthique et demandent à leurs conseillers et employés de prendre connaissance du code d’éthique et d’attester qu’ils l’ont lu … Continue Reading

G.R.C… Vous connaissez? *

Posted in AMF, Compliance and Supervision, Conformité et supervision, Enforcement

« GRC » c’est en fait le nouvel acronyme populaire auprès des institutions financières quant à leurs saines pratiques commerciales. En effet, GRC correspond à la Gouvernance, la gestion intégrée des Risques et la Conformité qui, selon l’Autorité des marchés financiers (AMF ou Autorité), sont à la base des saines pratiques commerciales.

À cet effet, l’AMF a publié en juin 2013 la Ligne directrice sur les saines pratiques commerciales, laquelle vise à énoncer les attentes de l’AMF à l’égard d’un traitement équitable du consommateur, soit le consommateur de produits financiers ou l’utilisateur de services financiers.

En précisant ainsi ses attentes, … Continue Reading

Le recours collectif : un véhicule procédural – Commentaire sur l’arrêt Banque de Montréal c. Marcotte, 2014 CSC 55*

Posted in Compliance and Supervision, Conformité et supervision, Jurisprudence, Litigation

Trois recours collectifs ont été intentés contre des institutions émettrices de cartes de crédit afin d’obtenir le remboursement des frais de conversion imposés sur les opérations en devises étrangères. Selon les demandeurs, ces frais contrevenaient à différentes dispositions de la Loi sur la protection du consommateur (L.p.c.). Les cartes délivrées par chaque institution ont été réparties en deux groupes : celles qui indiquaient qu’un taux de change s’appliquerait aux achats en devises étrangères sans mentionner les frais de conversion ou sans donner de détails à leur sujet (le groupe A), et celles qui décrivaient, explicitement, les frais de … Continue Reading

OSC Second Guesses IIROC on Marc McQuillen Settlement Agreement and Northern Securities Penalties

Posted in Compliance and Supervision, Enforcement, IIROC, OSC

As we discussed in a previous post, the Ontario Securities Commission (OSC) rarely exercises its broad statutory discretion to interfere with and remake IIROC decisions. Last month, the OSC departed from this approach on two separate occasions.

First, in McQuillen, the OSC took the rare but not unprecedented step of setting aside as “manifestly unfair” a 2007 settlement agreement (the Agreement) between IIROC and Marc McQuillen (the Applicant). The OSC also ordered IIROC to expunge the Applicant’s related disciplinary record and to repay $25,000 in fines to the Applicant.

The Applicant entered into the … Continue Reading