What CIRO Does with Member Conduct Complaints

Have you ever wondered what happens when there is a complaint about misconduct at an investment or mutual fund dealer?

CIRO oversees investment dealers and mutual fund dealers in Canada. We have the authority to set rules and enforce violations of those rules by a Dealer Member or individual registrant.

Complaints come to CIRO from a variety of sources—both internal to CIRO and external, including public complaints.

External complaints come from individual investors who contact CIRO by telephone, email or through an online complaint form because of potential misconduct they have experienced, sometimes including fraud and scams. CIRO has a dedicated department, known as Complaints & Inquiries, which receives all public complaints submitted directly to CIRO and assists complainants in understanding the complaint process and their options.

Complaints are also reported to CIRO by Dealer Members through the Complaints and Settlement Reporting System (COMSET) and the Member Event Tracking System (METS), through CIRO’s whistleblower service, and by outside public agencies such as provincial, territorial and international securities regulators, among others.

CIRO’s cross-functional approach means that complaints also come from internal sources and departments at CIRO, including Registration, Business Conduct Compliance, Financial & Operation Compliance, Trading Conduct Compliance, Trading Review and Analysis and Market Surveillance.

Complaints about CIRO Dealer Members or individual registrants may be referred to CIRO’s Enforcement department.

What is Enforcement’s Role?

Enforcement aims to protect investors from unfair, improper and fraudulent practices, improve industry standards, and strengthen market integrity. The Enforcement team investigates cases involving serious misconduct in order to ensure that those who breach the rules are held accountable and to the highest standard of conduct.

Enforcement investigates potential misconduct and may advance disciplinary proceedings where warranted, while striving to be fair, effective and timely.

Fairness means that Enforcement conducts thorough investigations. Enforcement strives to be effective by advancing cases that target the most serious misconduct. Timeliness is important because the strongest deterrent messages to the industry come when the case is brought close in time to the misconduct itself—increasing the deterrence message to the wrongdoer and others.

When a complaint involving a potential regulatory violation is received, Enforcement conducts an initial review to determine whether there is sufficient evidence of a breach of CIRO’s rules to warrant further investigation.

If further investigation is warranted, Enforcement will collect and review all relevant evidence relating to the case. If the evidence is sufficient to establish a material breach of CIRO’s rules, the matter will be referred for prosecution and a formal disciplinary action is initiated.

Dealer Members have obligations under CIRO rules to respond to complaints submitted to them in a fair and timely manner. Enforcement reviews Dealer Member complaint handling to ensure compliance with CIRO rules.

What is a CIRO Hearing Panel?

When Enforcement decides that a disciplinary prosecution is warranted, CIRO has a robust process in place to ensure that all disciplinary matters are considered and determined fairly by independent and impartial hearing panels.

Hearings are conducted before an independent tribunal consisting of a three-person hearing panel, chaired by either a former judge or a senior member of the legal profession and two industry members.

CIRO maintains the independence of the hearing process, which is set up and administered through the Hearings Office, where decision-makers remain neutral, impartial and independent. Both parties to the proceedings, CIRO Enforcement and the respondent(s), have equal opportunity to present their case while the hearing panel remains impartial and independent through the process.

Sanctions, Fines & Disgorgement

If a hearing panel decides that misconduct occurred, Dealer Members and individual registrants can be sanctioned – fined and/or ordered to pay disgorgement. They can also be barred from operating in the industry for a period or on a permanent basis.

CIRO’s Sanction Guidelines provide a framework to ensure that sanctions are imposed consistently and proportionately.

CIRO’s Enforcement department issues annual Enforcement Reports to enhance transparency about the process and outcomes and to alert regulated persons to forms of misconduct so they can redress any issues proactively with their compliance teams.