Enforcement penalties will be used to help fund the new SRO
By James Langton
A fund that’s built from enforcement sanctions will be used to help finance the creation of a new self-regulatory organization.
The Ontario Securities Commission (OSC) said Thursday that the Mutual Fund Dealers Association of Canada (MFDA) can tap into its discretionary fund to help pay the costs of its planned integration with the Investment Industry Regulatory Organization of Canada (IIROC).
According to the decision, the MFDA sought permission from the OSC to use its discretionary fund — which is primarily comprised of money paid in enforcement penalties — to help pay for legal advisors, consultants and other professionals that are advising the SRO on its integration with IIROC.
The regulator said the MFDA could use up to $4.29 million from the fund to finance its share of the integration costs.
Typically, the discretionary fund is used to finance MFDA enforcement hearing costs, its contingency fund, and to fund special initiatives that benefit investors or the capital markets. It’s not used for the SRO’s ordinary operating costs.
The OSC ruled that it’s in the public interest to allow the MFDA to use the fund to help finance the creation of a new SRO that is intended to enhance investor protection.
According to the MFDA’s latest annual report, the discretionary fund had just over $6 million in assets as of June 30, 2021.
Source: Investment Executive
