On September 21, 2015, the Ontario Securities Commission's
(OSC) Compliance and Registrant Regulation Branch (CRR) released
its Annual Summary Report for Dealers, Advisers and Investment
Fund Managers, also known as OSC Staff Notice 33-746
(the Report). The CRR oversees over 1,000 firms and nearly 67,000
individuals in the industry. The Report is divided into five main
sections, dealing respectively with (i) new policy initiatives,
(ii) registrant outreach, (iii) registration initiatives, (iv) key
findings from ongoing compliance reviews and (v) enforcement
responses with respect to registrant misconduct.
The 96-page Report is a valuable resource and worth reading in
its entirety. This post summarizes a number of the key issues that
the Report identifies.
The Report reviews a range of policy initiatives under the
categories listed below. As indicated, many of these have been
discussed in previous posts on this blog:
Cost disclosure, performance reporting and client statements
(CRM2 amendments to NI 31-103 and the related interim relief orders);
Independent dispute resolution services for registrants (OBSI report);
Ongoing amendments to registration requirements, exemptions and
ongoing registrant obligations (Amendments to NI 31-103).
The Report briefly discusses the progress of its Registrant
Outreach program, which since its initiation in 2013 has included
26 in-person and web-based seminars that have been attended by
4,100 individuals. Other initiatives include the establishment of
the Registrant Advisory Committee and various communications
The Report notes the success of the OSC's pre-registration
review program, in which key personnel of firms applying for their
initial registration are interviewed with respect to their
understandings of regulatory requirements and also with respect to
their business plans. It also refers to concerns about peer-to-peer
(P2P) lending websites conducting business in Ontario and reviews
current trends in registration deficiencies.
Key Findings from Ongoing Compliance Reviews
This section begins by describing the compliance review process,
including how the "targets" are selected and the nature
and purpose of "sweep reviews" of recently registered
firms. The Report notes that firms are selected for compliance
reviews based on a number of factors which include the firm's
response to the most recent risk assessment questionnaire, the
firm's compliance history, complaints and tips from third
parties and intelligence from other OSC branches, self-regulatory
organizations or another regulator. This is followed by a
discussion of common compliance issues (e.g. inadequate referral
arrangements, inadequate record-keeping, failure to provide notice
of ownership changes or of acquisitions, inadequate KYC, poor
supervision and numerous others). There is also an extensive
discussion of reporting requirements surrounding outside business
activities, which include officer and director positions but can
extend as far as certain volunteer and charitable activities where
an individual is in a position of power or influence or is in
contact with potential clients who may be vulnerable.
Acting on Registrant Misconduct
Recent regulatory action against registrants is the subject of
the last major section of the Report. Over the 2014-2015 fiscal
year, there were a total of 64 actions, of which eight were
referred to the OSC's Enforcement Branch. The included
summaries of contested matters show that the use of pre-signed
forms is a significant issue for the regulator, as are failures to
properly collect KYC and suitability information.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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