July 10, 2019

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Letter Summary:

IIROC is moving ahead with proposals to introduce a minor contravention program (“MCP”) which would be a middle ground between a cautionary letter and formal disciplinary action. Unlike the original proposal, the MCP would not be available for dealer members but only for Approved Persons (individuals). MCP Notices would be issued for contraventions of IIROC requirements that are isolated and result in limited harm to the public. The MCP would be based on stated criteria for eligibility, and sanctions would be fixed at $5,000 per contravention (an increase from the $2,500 originally proposed). Each case would have to be approved in a streamlined process by a one-member hearing panel. A public notice setting out all matters resolved by way of MCP Notice would be issued quarterly but without identifying the Approved Person. They are also proposing to adopt a staff policy on Early Resolution Offers to complete settlement agreements earlier in the enforcement process based on the stated criteria for eligibility. Dealers and Approved Persons who resolve a case would be granted a 30% reduction on the sanctions IIROC staff would otherwise seek in a settlement agreement. 

Overview of the Council’s Comments:

The council supports the proposed MCP and Early Resolution Offers as they may assist staff in deploying resources to more serious offences. In our view, the fairness of the program relies on the overall governance regime with respect to the discretion exercised by staff.  The MCP should remain a principled program and to ensure the program has appropriate oversight, it should be reviewed periodically to assess the appropriateness of cases selected.  Additionally, our view is that if an MCP notice is issued in lieu of a full disciplinary hearing, it will be particularly important for IIROC to ensure that there are no more serious systemic issues underlying the one small contravention. While closely monitoring Approved Persons who have been subject to an MCP notice for further infractions. We also query whether a proposed MCP Agreement should be submitted for acceptance automatically to a one-member hearing panel rather than potentially a three-member hearing panel if the circumstances so warrant.