Ontario budget boosts enforcement powers for investment industry regulator
Ontario is handing the country's investment industry regulator significant new enforcement powers.
In the budget tabled Thursday, the province announced plans to introduce new legislation granting the Canadian Investment Regulatory Organization (CIRO) statutory authority to compel evidence in its investigations and disciplinary hearings. The province also promised legislative updates that would provide CIRO staff with legal immunity for any good-faith actions.
The changes will provide CIRO, a self-regulatory organization, with many of the same enforcement tools that have long been available to the Ontario Securities Commission, the province's official market watchdog.
In a statement, CIRO president and chief executive officer Andrew Kriegler said the government was sending an important message by expanding the organization's powers.
'If you harm investors in Ontario, you will be held accountable for your actions,' he said. 'As a public interest regulator, these new enforcement tools will enable us to provide stronger protection to investors.'
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Having authority to compel testimony is considered an especially potent enforcement tool because, unlike in criminal law, it requires those involved in investigations to answer questions and provide relevant documents. Provincial regulators, such as the OSC, regularly utilize compelled testimony during investigations and enforcement proceedings.
CIRO, which was formed in 2023, and its predecessor groups, the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada, have been seeking statutory immunity and the power to compel testimony for many years.
'Without legislative amendments to relevant securities legislation, IIROC has no ability to obtain the co-operation of individuals and entities not regulated by us, even where they may have relevant evidence,' CIRO predecessor IIROC said in its 2019 enforcement report.
'Unfortunately, this imposes limitations on our ability to fully investigate certain cases and obtain the best evidence.'
Immunity, the report said, 'is necessary to allow us to take appropriate regulatory action in the public interest, without fear of reprisal.'
Since 2017, every province and territory in Canada has granted CIRO or its predecessors expanded enforcement powers. According to CIRO's 2024 annual report, the organization now has legal-fine collection authority across the country and has the ability to compel testimony in Quebec, Alberta, the four Atlantic provinces and all three territories.
Those jurisdictions, in addition to Manitoba, also provide CIRO with statutory immunity.
Once the changes in Ontario take effect, British Columbia and Saskatchewan will be the only Canadian jurisdictions where CIRO's sole legal authority is to collect fines through provincial courts.
In 2024, CIRO imposed roughly $14-million in penalties and related fines, a 44-per-cent decline from the $25-million in penalties it levied in 2023.
'While these financial orders have declined, significantly more of CIRO's hearing panel orders issued in 2024 have included suspensions and permanent prohibitions against individuals, as opposed to solely focusing on orders against firms,' law firm Osler, Hoskin & Harcourt LLP said in a December, 2024, analysis of CIRO's latest enforcement report.
'We may see an increase in individually imposed sanctions and penalties in the coming year.'
CIRO oversees the conduct of nearly 110,000 financial professionals across Canada and regulates trading activity on the country's largest exchanges. In 2024 alone, CIRO monitored more than $4-trillion in trade value on Canadian exchanges.
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