Investor Alert:
CIRO is issuing a warning to Canadian investors regarding Canada Token Trade.
Effective Date: December 31, 2021
IIROC is publishing guidance on the capital requirements for contingent liabilities involving lawsuits where there is an enforceable judgment against the Dealer Member (Dealer).
For regulatory accounting purposes, IIROC staff considered the issue of whether capital charges should apply at the time of the judgment, and determined, based on the potential for the judgment amount becoming a definite liability, that a capital charge subject to the exception listed below, must be provided.
In instances where there is an adverse judgment and the Dealer does not intend to appeal the decision, IIROC will require the Dealer to accrue a loss provision equal to the judgment amount.
Where the Dealer intends to appeal the decision, the Dealer is required to:
If such a legal opinion is provided to IIROC, no capital charge is required until the time that the appeal is heard and ruled upon. If however, the Dealer does not obtain such an opinion or decides not to obtain an opinion within this 30- day period, IIROC will require the Dealer to either accrue a loss provision or provide a capital charge equal to the judgment amount less any loss provisions that have already been accrued by the Dealer until such time that the appeal is heard and ruled upon.
All Dealers are reminded:
IIROC Rules this Guidance Note relates to:
This Guidance Note replaces Member Regulation Notice MR0230 - Recognition of Contingent Loss arising from Litigation.
This Guidance Note was published under Notice 21-0190 - IIROC Rules, Form 1 and Guidance.