Yesterday, the Investment Industry Regulatory Organization of Canada issued updated guidance on outside business activities. The proposed guidance follows last year's proposed rule on Dealer Members' personal financial dealings with clients and outside business activities, and is intended to replace current guidance once the proposed rule is finalized.
Outside business activities include activities that could give rise to a potential conflict of interest or client confusion, including specifically activities conducted outside of the Dealer Member by an approved person where direct or indirect payment is received or expected. IIROC cites membership on a board of any organization as an example of an activity that may give rise to potential conflicts. The IIROC notice also reminds registrants that Form 33-109F4 Registration of Individuals and Review of Permitted Individuals requires approved person to disclose their outside business activities to IIROC.
The proposed guidance sets out a non-exhaustive list of considerations for dealer members relating to outside business activities, including that such activities:
- should not materially impair a dealer member's duty of care to clients;
- should not involve the use of client information;
- must be clearly seen to be outside the dealer member;
- include robust and impartial approval and control processes; and
- should be in keeping with both the letter and spirit of Dealer Member Rules 18.14(1)(e) and 29.1.
The proposed guidance also considers the supervision of outside business activities and filing requirements via NRD. For more information, see IIROC Notice 11-0150.
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