Investor Alert:
CIRO is issuing a warning to Canadian investors regarding Canada Token Trade.
Effective Date: December 31, 2021
This Guidance provides an explanation of:1
Pursuant to subsection 9204(2), an individual’s application will be approved unless:
An individual’s application may be approved subject to any terms and conditions that may be appropriate.2
IIROC’s approval regime is similar to the registration regime set out in securities legislation.
In each application for approval/registration3 , Staff will evaluate whether an individual meets the criteria set out in section 9204. This includes evaluating whether the individual is suitable “fit and proper” and/or whether the approval/registration is not in the public interest or objectionable.
A similar review may be conducted for existing Approved Persons under section 9207.4
Three fundamental criteria determine whether an individual is “fit and proper”:
In evaluating a person’s integrity, Staff’s consideration will include but is not limited to whether the individual has been:
We treat each application on a case-by-case basis. We will take into account the seriousness of, and circumstances surrounding any matter that may impact the individual’s suitability, the explanation provided by the individual, the passage of time since the matter occurred, and evidence of the individual’s appreciation for the seriousness of the matter.
Dealers, applicants and Approved Persons should be mindful of the importance of true, complete and timely disclosures and that failure to provide the required information will be considered in the review.5
In evaluating a person’s financial solvency, our consideration will include but is not limited to the following on whether the individual has:
In evaluating a person’s competence and capability, our consideration will include but is not limited to whether the individual:
IIROC Rules and securities legislation generally draw a distinction between whether:
In considering whether an approval is not in the public interest or a registration is otherwise objectionable, we will take into account:
Although in most cases the question of whether an individual's approval or registration is objectionable, or not in the public interest, is related to the same factors as those considered in the suitability assessment, we will also consider whether the approval or registration should be granted on broader public interest grounds regardless of the determination made based on the suitability criteria/factors.
If we have concerns about an individual, we may recommend refusal, revocation, suspension, or impose terms and conditions on their approval/registration. In all such cases, individuals are given an opportunity to be heard before a decision is made on their approval/registration.6
Where issues give rise to terms and conditions, we will impose the terms and conditions on the individual’s approval/registration. We do not accept voluntary supervision as an appropriate regulatory response. The imposition of formal terms and conditions on the record provides transparency. These terms and conditions, while in effect, are disclosed on IIROC’s Advisor Report and also on the National Registration Search website. The disclosure will provide investors and other stakeholders with access to the information about approved/registered individuals.
We recognize the importance to Dealers of timely reviews and approvals. We may require additional time in cases where we have concerns about an individual based on the criteria set out in the Notice. Such reviews are ultimately in the best interest of investors and the industry itself. In order to facilitate our reviews it is important that Dealers provide prompt and complete responses to our questions.
The following generally trigger extensive IIROC Registration Staff review:
In these cases, we will typically request that the individual provide a letter (signed by both the individual and the Chief Compliance Officer) to explain the circumstances leading up to the relevant disclosure. In cases where we have serious concerns about an individual, we will also request letters from the Dealer and the individual explaining why they believe the individual is suitable for approval/registration and why the Dealer supports the individual’s application or continued approval/registration. Dealers should expect applications containing material disclosures to take additional time.
Additional supporting documents listed below may be required. Dealers should submit any relevant supporting documents to the IIROC lead jurisdiction as soon as practicable after the initial filing. We may also ask for additional information or documents at any time during the review process.
Disclosure | Supporting document |
Item 13 Form 33-109F4 – Regulatory Disclosure | |
13.1.b) - Refusal of registration by a Securities Regulatory Authority (SRA) 13.1.c) - Exemption denied or license refused by a SRA 13.1.d) - Disciplinary proceedings or any order resulting in disciplinary proceedings by a SRA 13.2.b) - Refusal of approval by a Securities Regulatory Organization (SRO) 13.2.c) - Disciplinary proceedings conducted by any SRO or similar organization 13.3.b) - Refusal of registration or a license under any legislation relating to your professional activities 13.3.c) - Suspension or disciplinary actions by an non-securities regulator |
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Item 14 Form 33-109F4 – Criminal Disclosure |
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Item 15 Form 33-109F4 – Civil Disclosure |
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Item 16 Form 33-109F4 – Financial Disclosures | |
For undischarged bankruptcy |
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For discharged bankruptcy |
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For unsatisfied consumer proposal debt / consolidation / garnishment / requirement to pay / debt obligations |
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For satisfied consumer proposal / debt consolidation / garnishment / requirement to pay |
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It is critical that Dealers conduct background investigation of prospective Approved Persons. This is an important part of determining regulatory risk for both the Dealer and its clients. In addition to reviewing and discussing the applicant’s 33-109F4 and contacting their previous employers, we recommend the following hiring best practices:
We strongly encourage Dealers to proactively consider the issues set out in this notice before hiring or promoting an individual and before submitting an application for approval/registration. Dealers should refer to National Instrument 31-103 (NI 31-103) Registration Requirements, Exemptions, and Ongoing Registrant Obligations, and its companion Policy as well as NI 33-109 Registration Information with regards to their due diligence obligations. Failure of a registered firm to take reasonable steps to discharge its due diligence responsibilities may be relevant to the registered firm’s own continued fitness for registration.
IIROC Rules this Guidance Note relates to:
This Guidance Note replaces Notice 09-0192 - IIROC Notice – IIROC Registration – The Fit and Proper Test for Approved Persons.
This Guidance Note was published under Notice 21-0190 - IIROC Rules, Form 1 and Guidance.