Paul C. Bourque
November 1, 2004
Re: "Investors Need Faith in SROs," Oct. 15.
Diane Urquhart's article deserves a response. Investors should have
confidence in the work of self-regulatory organizations, but that
confidence must be based on transparent reporting and accountability.
There is no securities regulatory organization in Canada that provides
more information and is more accountable to provincial governments than
the Investment Dealers Association of Canada.
First, let's get the facts straight. The only legislative power the
provincial governments "delegate" to the IDA is registration of brokers --
and even that is only delegated in B.C., Alberta and Ontario. The
provincial governments do not "delegate" securities industry compliance
Ms. Urquhart suggests that the IDA should not be given more effective
tools to collect fines until private investors are provided similar
powers. This suggestion confuses penalties for regulatory misconduct with
investor compensation for investment losses.
In the past three years, the IDA has completed 165 discipline cases and
imposed over $12 million in fines. If investors are to have faith in SROs,
there must be an effective way to collect penalties imposed for
misconduct. The IDA already has the power to file its discipline decisions
as orders of the court in Alberta. We need this power to more effectively
collect fines in the rest of Canada. However, more effective fine
collection for SROs will not assist investors in obtaining compensation.
Discipline fines are imposed for regulatory wrongdoing and misconduct.
There may be no financial loss, but penalties may still be appropriate. Or
the loss may have been made good by the firm before the matter is resolved
by discipline. The fact a client may have been compensated, however, does
not mean wrongdoing should not be punished.
By all means, let's improve the remedies available to investors to obtain
compensation where appropriate, but it's just as important for investors
that SROs have the powers they need to fulfill their public-interest
mandate to protect investors.
Paul C. Bourque, senior vice-president, member regulation, Investment
Dealers Association of Canada.