The Investment Dealers Association of Canada’s enforcement record: Are penalties grossly inadequate

Abstract

Purpose

The purpose of this study is to analyze the aggravating and mitigating factors considered by the Investment Dealer Association (IDA)’s (Now IIROC) hearing panels when determining penalties.

Design/methodology/approach

To conduct this research, Quicklaw’s database Securities Regulation Tribunal Decisions were searched for all decisions made by the IDA between January of 2003 and June of 2008. This paper analyzes the 238 cases that were found.

Findings

The findings revealed that the IDA’s hearing panels were more likely to identify mitigating rather than aggravating factors when considering the appropriate penalties to be imposed on registrants. Perhaps this was because the hearing panels were more preoccupied with identifying mitigating factors that would, in turn, lead to less severe penalties for their members. The aggravating factors identified and considered were fewer in number than the aggravating factors identified but not considered by the hearing panels when imposing penalties.

Research limitations/implications

IIROC needs to take stock of this study and encourage hearing panels to seriously take into consideration the factors listed in their sanction guidelines and apply them methodologically to each case.

Originality/value

Despite the widespread use of self-regulatory organization (SROs) to regulate various occupations, SROs remain an understudied institution. This is the first study of its kind that looks at the aggravating and mitigating factors used by an SRO’s hearing panel in administrative hearings.

Citation

Lokanan, M. (2014), "The Investment Dealers Association of Canada’s enforcement record: Are penalties grossly inadequate", Journal of Financial Regulation and Compliance, Vol. 22 No. 3, pp. 235-251. https://doi.org/10.1108/JFRC-03-2013-0005