Canada: Brokers’ Report: IDA – Time Limitation

Last Updated: April 9 2008
Article by John Blair, QC

Most Read Contributor in Canada, September 2016


Sometimes brokers or member firms query whether they can or should be the subject of IDA disciplinary proceedings when the broker has left the industry or the matters in question otherwise seem to be "ancient history". Various regulatory decisions have established that the IDA is empowered to investigate and discipline former members who are no longer working in the industry. As for time limitations, a recent decision of the IDA’s Pacific District Council (Re Global Securities Corporation) determined that an IDA Panel does not have jurisdiction to proceed with a hearing where more than six years have passed since the events in question. IDA Staff argued that limitation periods should not start until they are aware of the facts giving rise to the complaint since "discoverability" is generally an important component of limitations law. The Panel disagreed that discoverability principles apply to a limitation period concerning IDA bylaw violations.

The six year period was determined through a consideration of two British Columbia statutes:

  1. the Limitation Act provides for a six year limitation in contractual situations in B.C. This is pertinent because the relationship between the IDA and its members is based in contract; and
  2. the Securities Act - like its counterparts in other provinces such as section 129.1 of the Ontario Act and section 201 of the Alberta Act - provides a six year limitation period from the occurrence (not discovery) of the event in which a Securities Commission can bring enforcement proceedings against a member firm, broker or anyone else. It would be inconsistent if the IDA was able to prosecute a member firm in circumstances where the applicable Securities Commission could not do so, and where the appellate powers of the applicable Securities Commission could no longer be exercised.


In a recent Ontario Superior Court action, Clark v. BMO Nesbitt Burns, an issue arose about a broker’s book of business. The court found that the broker had been wrongfully dismissed. It awarded 18 months income in lieu of notice because he was 52 years old and had worked at the firm for 17 years. On the book of business issue, the court made the finding that, had the broker been given reasonable notice of termination, he would have been entitled and able to sell his book of business to another broker in the firm via a transition agreement. The court attributed a value of $90,000 to the book although there was conflicting evidence supporting both higher and lower amounts. In the particular circumstances of this case, the broker was unable to relocate his book to new employment because outstanding criminal charges made it unlikely that anyone would hire him. His employer had argued that a broker dismissed without cause might be entitled to a severance package or to a transition agreement, but not both. The court disagreed with that and awarded damages representing a reasonable severance package on top of the value of the book.


Two cases are pending in the British Columbia courts where clients, Madiuk and Hryhorchuk, are suing their brokers on the basis that they were not sufficiently informed about the risks of an investment in assetbacked commercial paper (ABCP). In Madziuk’s case, he allegedly deposited $150,000 into his account in February 2007. He further alleges that the broker told him that his investment was a safe money market investment devoid of risk. The cases are only at the pleadings stage and we will follow them as they unfold.


In August 2007 an IDA Panel concluded that a broker had engaged in unbecoming conduct related to his unwitting involvement in a "pump and dump" stock manipulation scheme. In late December, the broker received a one year suspension, a $40,000 fine and a costs award of $25,000. (Parenthetically, we note that the IDA costs were approximately $100,000, but as many Panels have in the past, this one declined to saddle the broker with full costs liability on the theory that fear of a huge costs award could intimidate respondents from exercising their legal right to dispute the charges in the first place.) Partnership The broker’s counsel had argued that since his client was not aware of the manipulation scheme, he lacked the necessary moral turpitude required to justify a charge of conduct unbecoming. The Panel acknowledged that the broker might have lacked moral turpitude but concluded that "gross negligence can amount to conduct unbecoming". It drew a distinction between gross negligence and mere ordinary negligence. There is no bright line between these standards. There were a number of circumstances associated with the trading in question that the Panel felt should have triggered the broker’s suspicions, and which took the case from regular negligence to gross negligence. The Panel felt that he did not make sufficient efforts to know his client and to ensure that the orders were within the bounds of good business practice, due to the unusual circumstances of the trading. These included:

  1. unusually high volume;
  2. the simultaneous opening of a number of accounts from apparently related parties;
  3. all of the orders were unsolicited and each account dealt only with the one security in question;
  4. some commonality in the source of funds and instructions;
  5. the knowledge by the broker that one of the parties involved had been untruthful in a client application form;
  6. on at least two occasions, the broker was informed who would be on the other side of the trade before it was posted in the market;
  7. the acceptance of trading orders from at least one individual who did not have proper authority to do so.

This case underscores the duty of brokers to act as "gatekeepers", including proper checks of clients and making further enquiries if trades are conducted in circumstances that should raise questions or suspicions.

Edited by David Di Paolo

About BLG

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.