Scathing audit of IDA finally made public
'Need for improvement'

Wojtek Dabrowski
Financial Post

Thursday, January 13, 2005

After years of fighting to keep a scathing audit of the Investment Dealers Association private, the Ontario Securities Commission has released the report.

The audit, which the OSC completed in July, 2000, found "there is a need for significant improvement in the IDA's corporate governance and organizational structure and in the enforcement department."

It found the IDA lacked a formal process for evaluating the effectiveness of its board. Also, the IDA's enforcement department faced a backlog of cases and personnel resources seemed "to be stretched in all departments," the audit found.

Despite a freedom of information request from the public, the OSC battled to keep the audit quiet, arguing it was prepared with the understanding that its findings would never be publicized.

The OSC appealed decisions by the office of the Information and Privacy Commissioner of Ontario to release the audit and pressed forward with a judicial review of the situation.

Yesterday, however, Eric Pelletier, spokesman for the OSC, said the regulator decided "with the passage of time and the resources that would be required, that we would discontinue the judicial review we had under way."

It was also believed that disclosing the report could have impacted the relationship between the OSC and the IDA, Mr. Pelletier said.

In the future, results of such reports will be made public, he said.

The 2000 audit also found that hiring talented staffers was problematic at the IDA.

"During discussions with senior management and review of board minutes, it was noted that the IDA has difficulty attracting and retaining professional staff," the audit states. Base salaries and incentives were found to be problem areas.

Joe Oliver, the IDA's chief executive, said yesterday the association has since remedied the "vast bulk" of the issues identified by the OSC. "We took action with respect to personnel and we made a number of changes in form and changes in substance," Mr. Oliver added.