On October 12, 2018, Bill 67 was proclaimed into force in Nova Scotia. Bill 67 expands the enforcement powers of the Investment Industry Regulatory Organization of Canada (IIROC) in Nova Scotia in the interest of strengthening investor protection, with a focus on safeguarding the financial interests of seniors and vulnerable retail investors.

Bill 67 amends the Nova Scotia Securities Act to give IIROC broad investigatory and enforcement powers, including the ability to collect fines through the courts in Nova Scotia against wrongdoers found guilty of misconduct, the authority to collect and present evidence during investigations and at disciplinary hearings, and immunity from civil suits while it carries out its mandate in good faith. These three sets of powers are known as IIROC’s full enforcement toolkit.

With the passage of Bill 67, IIROC can now enforce fine collection in seven provinces: Nova Scotia, Prince Edward Island, Quebec, Ontario, Manitoba, Alberta and British Columbia.

Nova Scotia joins Alberta and Quebec as the only provinces that hand over the full enforcement toolkit to IIROC. In other provinces, IIROC has some but not all of these powers. For example, Ontario and British Columbia allow IIROC to collect fines through the courts, but do not provide it with the ability to collect and present evidence during investigations and at disciplinary hearings and do not provide IIROC with immunity from civil suits. Manitoba provides IIROC with collections powers, immunity from civil suits and the ability to launch appeals to the Manitoba Securities Commission. PEI allows IIROC to register disciplinary decisions with the Supreme Court of PEI and to collect evidence at the hearing.

The efficacy of these legislative amendments in other provinces is already showing: for example, in Ontario, fines collected by IIROC increased from $2.7 million to $3.4 million between 2016 and 2017 following passage of collections amendments.

IIROC’s enhanced enforcement authority has serious implications for market participants. In the past when IIROC lacked the authority to collect fines or enforce penalties, persons found guilty of serious infractions could evade disciplinary fines by ceasing practice and leaving the industry. Canada has an estimated $1.1 billion of unpaid securities fines. IIROC’s enhanced enforcement tools appear to provide a meaningful backstop to regulatory penalties, and create significant incentives for market participants to abide by IIROC rules, cooperate with investigations and negotiate settlements. Given the increased rates of collection already seen in the provinces granting IIROC enhanced powers, one may expect the remaining provinces to follow.

The author would like to thank Coco Chen, articling student, for her contribution to this article.