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Section 24

Discipline Powers

24.1 Power of Hearing Panels to Discipline
24.1.1 Approved Persons
A Hearing Panel of the applicable Regional Council shall have power to impose upon an Approved Person or any other person under the jurisdiction of the Corporation any one or more of the following penalties:
(a) a reprimand;
(b) a fine not exceeding the greater of:

(i) $5,000,000.00 per offence; and
(ii) an amount equal to three times the profit obtained or loss avoided by such person as a result of committing the violation;
(c) suspension of the authority of the person to conduct securities related business for such specified period and upon such terms as the Hearing Panel may determine;
(d) revocation of the authority of such person to conduct securities related business;
(e) prohibition of the authority of the person to conduct securities related business in any capacity for any period of time;
(f) such conditions of authority to conduct securities related business as may be considered appropriate by the Hearing Panel;
if, in the opinion of the Hearing Panel, the person:
(g) has failed to carry out any agreement with the Corporation;
(h) has failed to comply with or carry out the provisions of any federal or provincial statute relating to the business of the Member or of any regulation or policy made pursuant thereto;
(i) has failed to comply with the provisions of any By-law, Rule or Policy of the Corporation;
(j) has engaged in any business conduct or practice which such Regional Council in its discretion considers unbecoming or not in the public interest; or
(k) is otherwise not qualified whether by integrity, solvency, training or experience.
24.1.2 Members
A Hearing Panel of the applicable Regional Council shall have power to impose upon a Member any one or more of the following penalties:
(a) a reprimand;
(b) a fine not exceeding the greater of:

(i) $5,000,000.00 per offence; and
(ii) an amount equal to three times the profit obtained or loss avoided by the Member as a result of committing the violation;
(c) suspension of the rights and privileges of the Member (and such suspension may include a direction to the Member to cease conducting securities related business) for such specific period and upon such terms as such Hearing Panel may determine, or, if the rights and privileges have already been suspended under Section 24.3, the continuation of such suspension (including a prohibition on the Member conducting securities related business) for such specified period and upon such terms as such Hearing Panel may determine;
(d) termination of any and all of the rights and privileges of Membership;
(e) expulsion of the Member from the Corporation;
(f) such terms and conditions on Membership of the Member as may be considered appropriate by the Hearing Panel;
(g) appointment of a monitor in accordance with Section 24.7; and
(h) directions for the orderly transfer of client accounts from the Member.
if, in the opinion of the Hearing Panel, the Member:
(i) has failed to carry out any agreement with the Corporation;
(j) has failed to meet any liabilities to another Member or to the public;
(k) has engaged in any business conduct or practice which the Hearing Panel in its discretion considers unbecoming a Member or not in the public interest;
(l) has ceased to be qualified as a Member by reason of the ownership, integrity, solvency, training or experience of the Member or any of its Approved Persons or other employees or agents, or any person having an ownership interest in the capital or indebtedness of the Member;
(m) has failed to comply with or carry out the provisions of any of the By-laws, Rules or Policies of the Corporation; or
(n) has failed to comply with or carry out the provisions of any applicable federal or provincial statute relating to its business or of any regulation or policy made pursuant thereto.
24.1.3 Continuation of Liability
If the rights, privileges or Membership of a Member are suspended or terminated or a Member is expelled from the Corporation, the Member or former Member shall remain liable to the Corporation for all amounts due to the Corporation by it.
24.1.4 Jurisdiction
(a) Former Members. For the purposes of Sections 20 to 24 inclusive, any Member, Approved Person or other person subject to the jurisdiction of the Corporation shall remain subject to the jurisdiction of the Corporation notwithstanding that such Member has ceased to be a Member, Approved Person or other person subject to the jurisdiction of the Corporation.
(b) Limitation. No proceedings shall be commenced pursuant to Section 20.1 against a former Member or person referred to in Section 24.1.4(a) unless a Notice of Hearing has been served upon such Member or person no later than five years from the date upon which such Member or person ceased to be a Member or held the relevant position with the Member, respectively.
24.2 Costs
A Hearing Panel may in any case in its discretion require that the Member or Approved Person pay the whole or part of the costs of the proceedings before the Hearing Panel pursuant to Section 20 and Section 24.1 or Section 24.3 and any investigations relating thereto.
24.3 Applications in Exceptional Circumstances
24.3.1 Approved Persons
Notwithstanding anything in Section 20 or Section 24,
(a) a Hearing Panel of the applicable Regional Council may, upon application by the Corporation made with or without notice to an Approved Person or any other person under the jurisdiction of the Corporation, impose any of the penalties provided for in Section 24.3.3 upon the person in the event that:

(i) the registration of the person under any securities legislation in any jurisdiction inside or outside Canada is cancelled, suspended, terminated, subjected to terms and conditions or the person fails to renew any such registration which has lapsed;
(ii) a securities commission, self-regulatory organization, securities regulatory authority, financial services regulator or professional licensing or registration body in any jurisdiction inside or outside Canada cancels, suspends or terminates the rights and privileges of the person;
(iii) the person fails to cooperate with an examination or investigation conducted pursuant to Section 21;
(iv) the person has failed to carry out any written agreement with the Corporation to take action to comply with any By-law, Rule or Policy of the Corporation;
(v) the person has failed to comply with the provisions of any By-law, Rule or Policy of the Corporation;
(vi) the person has been charged with a criminal or regulatory offence relating to theft, fraud, misappropriation of funds or securities, forgery, money laundering, market manipulation, insider trading, misrepresentation or unauthorized trading and the Hearing Panel determines that such charge likely brings the capital markets into disrepute;
(vii) the Corporation receives information regarding the incapacity of the person, by reason of mental or physical illness, other infirmity or addiction to or excessive use of alcohol or drugs; or
(viii) the person has failed to comply with any penalties, other than the payment of a fine or costs, imposed on the person pursuant to Section 24.1.1, Section 24.3 or Section 24.4.
(b) A Hearing Panel may impose a penalty under section 24.3.3 on an Approved Person or any other person under the jurisdiction of the Corporation on an application made under Section 24.3.1(a) without notice only if the Hearing Panel determines that proceeding without notice is, in the circumstances, in the public interest, including but not limited to where:

i. providing notice to the Approved Person or any other person under the jurisdiction of the Corporation, would be likely to result in financial loss or imminent harm to the public, to other Approved Persons or Members, or to the Corporation; or
ii. the length of time required to arrange for and conduct a hearing pursuant to Section 20 and Section 24.1 would be prejudicial to the public interest.
24.3.2 Members
Notwithstanding anything in Section 20 or Section 24,
(a) a Hearing Panel of the applicable Regional Council may, upon application by the Corporation made with or without notice to a Member, impose any of the penalties provided for in Section 24.3.3 upon the Member in the event that:

i. the registration of the Member as a mutual fund dealer under any securities legislation in any jurisdiction inside or outside Canada is cancelled, suspended, terminated, subjected to terms and conditions or the Member fails to renew any such registration which has lapsed;
ii. the Member makes a general assignment for the benefit of its creditors or is declared bankrupt or makes an authorized assignment or a proposal to its creditors under the Bankruptcy and Insolvency Act, or a winding-up order is made in respect of the Member or a receiver or other officer with similar powers is appointed in respect of all or any part of the undertaking and property of the Member;
iii. a securities commission, self-regulatory organization, financial services regulator or other securities regulatory authority inside or outside Canada cancels, suspends or terminates the rights and privileges of the Member;
iv. the Member has failed to maintain the minimum capital required under any By-law, Rule, Form or Policy of the Corporation;
v. the Member has failed to file with the Corporation a copy of a financial report of the Member as at the end of each fiscal month as required under any By-law, Rule or Policy of the Corporation;
vi. the Member has failed to file with the Corporation copies of the annual audited financial statements of the Member as required under any By-law, Rule or Policy of the Corporation;
vii. the Member has failed to maintain a Financial Institution Bond or mail insurance as required under any By-law, Rule or Policy of the Corporation;
viii. the Member has failed to rectify the circumstances causing the Member to be designated in early warning by the Corporation or has failed to comply with terms and conditions imposed on the Member after it was designated in early warning by the Corporation;
ix. Member has failed to cooperate with an examination or investigation conducted pursuant to Section 21; or
x. the Member has failed to carry out any written agreement with the Corporation to take action to comply with any By-law, Rule or Policy of the Corporation;
xi. the Member has failed to comply with the provisions of any By-law, Rule or Policy of the Corporation;
xii. the Member is in such financial or operating difficulty that a Hearing Panel determines that the Member cannot be permitted to continue to operate without risk of imminent harm to the public, to other Members or Approved Persons, or to the Corporation;
xiii. the Member has been charged with a criminal or regulatory offence relating to theft, fraud, misappropriation of funds or securities, forgery, money laundering, market manipulation, insider trading, misrepresentation or unauthorized trading and the Hearing Panel determines that such charge likely brings the capital markets into disrepute;
xiv. the Member has given notice of its intention to resign or is not carrying on business as a mutual fund dealer; or
xv. the Member has failed to comply with any penalties, other than the payment of a fine or costs, imposed pursuant to Section 24.1.2, Section 24.3 or Section 24.4.
(b) A Hearing Panel may impose a penalty under section 24.3.3 on a Member on an application made under Section 24.3.2(a) without notice only if the Hearing Panel determines that proceeding without notice is, in the circumstances, in the public interest, including but not limited to where:

i. providing notice to the Approved Person or any other person under the jurisdiction of the Corporation, would be likely to result in financial loss or imminent harm to the public, to other Approved Persons or Members, or to the Corporation; or
ii. the length of time required to arrange for and conduct a hearing pursuant to Section 20 and Section 24.1 would be prejudicial to the public interest.
24.3.3 Powers of a Hearing Panel
A Hearing Panel shall have the power to impose any of the following penalties upon a Member, Approved Person or other person under the jurisdiction of the Corporation in an application made pursuant to Section 24.3.1 or Section 24.3.2:
(a) suspension of any or all of the rights and privileges of Membership or authority of the person to conduct securities related business on such terms and conditions as the Hearing Panel considers appropriate;
(b) terms and conditions on Membership or the authority of the person to conduct securities related business;
(c) direction to immediately cease dealing with the public;
(d) direction for the orderly transfer of client accounts from the Member;
(e) for events other than those referred to in Sections 24.3.1(a)(vi) and (vii) and Section 24.3.2(a)(xiii), termination of Membership or prohibition of the authority of the person to conduct securities related business;
(f) for events other than those referred to in Section 24.3.2(a)(xiii), expulsion of the Member from the Corporation; and
(g) appointment of a monitor in accordance with Section 24.7.
24.3.4 Notice in Certain Circumstances
At any stage of an application pursuant to Section 24.3, a Hearing Panel may in its discretion require notice of the application to be given to a Member, Approved Person, or other person on such terms and conditions as it considers appropriate, including terms and conditions respecting the timing of notice and any abridging of ordinary hearing processes that the Panel considers fit.
24.3.5 Other Proceedings
Nothing contained in Section 24.3 shall prevent any other proceedings being taken against a Member, Approved Person or other person under the jurisdiction of the Corporation pursuant to any other provisions of Section 24.
24.3.6 Review of an Application
A Member or person may request a review of any decision made pursuant to Section 24.3 within 30 days of notice of the penalty being given in accordance with Section 24.5.3
24.3.7 Timing of a Review  
A review of an application pursuant to Section 24.3.6 shall be held before a Hearing Panel of the applicable Regional Council no later than 21 days after the request for the review, unless a Hearing Panel directs or the parties agree otherwise.
24.3.8 Review Panel
No member of a Hearing Panel who participated in an application pursuant to Section 24.3 shall sit on a Hearing Panel constituted for the review of that decision.
24.3.9 Decision is Final Where no Review
If a Member or person does not request a review of an application within the time prescribed in Section 24.3.6, then the decision of the Hearing Panel is final and there shall be no further review or appeal of the decision within the Corporation.
24.3.10 Stay Pending Review of an Application
An order of a Hearing Panel made pursuant to Section 24.3 takes effect upon its issuance and remains in effect pending a review under Section 24.3.6, unless a Hearing Panel directs otherwise.
24.3.11 Powers of a Hearing Panel on a Review of an Application
A Hearing Panel presiding over the review of an application pursuant to Section 24.3.6 may affirm, quash or vary the decision under review and may make any decision that could have been made by a Hearing Panel under Section 24.3.
24.3.12 Open to the Public
An application pursuant to Section 24.3 and the review of an application pursuant to Section 24.3.6 shall be open to the public except where:
(a) the application proceeds without notice to the Member or person;
(b) the application or review of the application is conducted in writing or the Hearing Panel determines that it is not practical to conduct the application or review of the application in a manner that is open to the public; or
(c) the Hearing Panel is of the opinion that intimate financial or personal matters or other matters may be disclosed at the hearing which are of such a nature, having regard to the circumstances, that the desirability of avoiding disclosure thereof in the interests of any person affected or in the public interest outweighs the desirability of adhering to the principle that hearings be open to the public, in which case the Hearing Panel may conduct the application or review of the application in camera.
24.3.13 Failure to Pay Fee, Levy, Assessment, Fine or Costs
In the event that:
(a) a Member fails to pay a fee pursuant to Section 14 or Section 15 within the time prescribed in Section 14.3 or Section 15.2 respectively;
(b) a Member fails to pay a fee, levy or assessment pursuant to any By-law, Rule or Policy of the Corporation within the time prescribed; or
(c) a Member or person fails to pay a fine or costs imposed by a Hearing Panel within the time prescribed by the Hearing Panel;
the Corporation may summarily, without further notice, suspend the rights and privileges of the Member or the authority of the person to conduct securities related business until such fee, levy, assessment, fine or costs is paid.
24.4 Settlement Agreements
24.4.1 Power to Enter into Settlement Agreement
The Corporation or any other person designated by it or the Board of Directors may negotiate a settlement agreement with a Member, Approved Person or other person under the jurisdiction of the Corporation, in respect of any matters for which the Member or person could be penalized on the exercise of the discretion of a Hearing Panel pursuant to Section 24.1.
24.4.2 Contents of Settlement Agreement
A settlement agreement shall be in writing and be signed by or on behalf of the Member or person and shall contain:
(a) a statement of facts sufficient to identify the matter to which the settlement agreement relates;
(b) a reference to any statutes or regulations thereto, By-law, Rules or Policies of the Corporation with which the Member or person has not complied and a statement as to future compliance therewith;
(c) the consent and agreement of the Member or person to the terms of the settlement agreement;
(d) the acceptance of the penalty to which the Member or person could be subject pursuant to Section 24.1;
(e) the waiver of the rights of the Member or person to a hearing pursuant to the By-laws and all rights of review thereunder; and
(f) such other matters not inconsistent with Section 24.4.2(a) to (e), inclusive, which may be agreed upon including, without limitation, the agreement by the Member or person to pay the whole or part of the costs of the investigation and any proceedings relating to the matters which are the subject of the settlement agreement.
24.4.3 Review and Determination by Hearing Panel
Such settlement agreement shall, on the recommendation of: the Corporation, be referred to a Hearing Panel of the applicable Regional Council which shall:
(a) accept the settlement agreement; or
(b) reject it.
A Hearing Panel shall not consider a settlement agreement pursuant to this Section unless notice of the hearing has been given in accordance with such period of time as is provided for in the Corporation’s rules of procedure and Section 24.5 specifying:
(c) the date, time and place of the hearing; and
(d) the purpose of the hearing with sufficient information to identify the Member or Approved Person involved and the general terms of the settlement agreement.
24.4.4 Binding Upon Acceptance or Imposition
A settlement agreement shall only become binding in accordance with its terms upon such acceptance and, in such event, the Member or person shall be deemed to have been penalized by a Hearing Panel of the applicable Regional Council for the purpose of giving notice thereof.
24.4.5 Rejection of Settlement Agreement by Hearing Panel
If a Hearing Panel rejects a settlement agreement pursuant to Section 24.4.3, the provisions of Sections 20, 21 and 24.1 shall apply, provided that no member of the Hearing Panel who participated in the deliberations of the Hearing Panel rejecting the settlement agreement shall participate in any hearing conducted by the Hearing Panel with respect to the same matters which are the subject of the agreement.
24.4.6 Without Prejudice
All negotiations of a settlement agreement shall be without prejudice and the negotiations may not be used as evidence or referred to in any hearing.
24.4.7 No Appeal of Acceptance or Rejection of Settlement Agreement
The acceptance or rejection of a settlement agreement by a Hearing Panel is final and is not subject to appeal or review pursuant to Section 24.6.3.
24.5 Publication of Notice and Penalties
24.5.1 Notice Requirements
If and whenever a Member, Approved Person or other person is penalized by a Hearing Panel, notice of the penalty and notice of the disposition of any review from the imposition thereof shall be given forthwith by the Corporation. If such penalty is subject to review the notice shall so indicate.
24.5.2 Content of Notice
A notice of penalty given pursuant to Section 24.5.1 shall include a summary of the facts, shall specify the By-law, Rules or Policies violated and the penalty assessed, and shall include the name of the Member or person upon which the penalty is imposed and, in the case of a penalty imposed upon an Approved Person or other person, shall include the name of the Member employing or retaining such person at the relevant time.
24.5.3 Method of Giving Notice
A notice of penalty given pursuant to Section 24.5.1 shall be given:
(a) by publication in a Corporation bulletin;
(b) by delivery of the notice to a news service or newspaper having national distribution;
(c) by delivery of the notice to any securities commission, stock exchange, self-regulatory organization or other securities regulatory authority having jurisdiction over the Member or individual concerned, and
(d) to such other persons, organizations or corporations, and in such other manner as the Hearing Panel imposing the penalty, and/or as the Corporation from time to time, deems advisable.
24.6 Effect and Review of Hearing Panel Decisions
24.6.1 Effect in All Regions
Any decision of a Hearing Panel in respect of a Member, an Approved Person or other person subject to the jurisdiction of the Corporation shall have effect in all regions where the Corporation has jurisdiction, unless and until otherwise ordered by the Board of Directors.
24.6.2 Review
The Board of Directors shall, upon the application of either the Corporation or the Member made within 30 days of receiving notice of the decision of the Hearing Panel, review the said decision and confirm or modify the decision of the Hearing Panel.
24.6.3 Review Hearing
With respect to a review pursuant to Section 24.6.2:
(a) the provisions of Sections 24.1 apply mutatis mutandis to any review by the Board of Directors;
(b) the Board of Directors:

(i) shall consider the record of the proceedings before the Hearing Panel;
(ii) shall permit the parties to appear before it on reasonable notice, with counsel or by agent, to make submissions and the provisions of Section 20.7 apply mutatis mutandis; and
(c) Members of the Board of Directors participating in a review hearing pursuant to this Section 24.6.3 shall not have taken part before the hearing in any proceedings with respect to the decision which is being reviewed. Subject to the provisions of Section 26, decisions of the Board of Directors pursuant to this Section 24.6.3 are final and there shall be no further review of such decisions within the Corporation.
(d) For the purposes of a review hearing conducted pursuant to this Section 24.6.3, the authority of the
Board of Directors may be exercised by a committee of the Board of Directors appointed pursuant to Section
3.6.4, provided that such committee shall include one public representative of a Regional Council who has not
taken part in any proceedings with respect to the decision which is being reviewed, which public representative
shall be entitled to participate in the review as if he or she was a member of the Board of Directors.
(e) The Board of Directors may in any case in its discretion require that a Member pay the whole or part of
the costs of a review hearing pursuant to this Section 24.6.3.
24.6.4 Stay of Proceedings
An order of a Hearing Panel takes effect upon its issuance and remains in effect pending a review under Section 24.6.2, unless the Hearing Panel or the Board of Directors directs otherwise.
24.6.5 Prohibition Against Review By Court or Tribunal
Except as provided in Section 26, no proceedings shall be taken in any court or other tribunal to question or review any decision, order, direction, declaration or ruling of a Hearing Panel or the Board of Directors or to prohibit or restrain any Hearing Panel or the Board of Directors or their proceedings.
24.7 Monitor
24.7.1   Powers of a Monitor
A monitor appointed pursuant to Section 24.1.2(g) or Section 24.3.3(g) shall oversee and report on the Member’s activities in accordance with any of the following terms and conditions and for such specified period as the Hearing Panel may determine:
(a) to enter and re-enter the Member’s premises and to remain on site to conduct day-to-day monitoring of all of the Member’s activities, including but not limited to, monitoring and review of accounts receivable, accounts payable, client accounts, the Member’s banking, any books or records of the Member, trading conducted by or on behalf of the Member for its own account or the account of its clients, payment of any debts or the creation of new debt and any reconciliation required to be completed by the Member;
(b) to make copies of information and to provide copies of such information to the Corporation or any other agency the Hearing Panel determines appropriate;
(c) to provide ongoing reporting of the monitor’s findings or observations to the Corporation or any other agency the Hearing Panel determines appropriate;
(d) to monitor compliance by the Member with any terms or conditions which have been imposed on the Member by the Corporation or any other regulator, including but not limited to, compliance with early warning terms and conditions;
(e) to verify and assist with the preparation of any regulatory filings, including but not limited to, the calculation of risk adjusted capital;
(f) to conduct or have conducted an appraisal of the Member’s net worth or valuation of any part of the Member’s assets;
(g) to assist the Member with the orderly transfer of client accounts;
(h) to pre-authorize any issuance of cheques or payments made by or on behalf of the Member or distribution of any of the Member’s assets;
(i) to assist the Member in formulating a process to address deficiencies identified by the Corporation;
(j) to assist the Member in developing and implementing procedures and internal controls to ensure the Member’s compliance with any By-law, Rule or Policy of the Corporation;
(k) to test and report on the adequacy of the Member’s procedures and internal controls; and
(l) any other terms or conditions that the Hearing Panel may determine.
24.7.2 Expenses of the Monitor
A Hearing Panel may in its discretion require that the Member pay the whole or part of the expenses related to a monitor appointed pursuant to Section 24.1.2(g) or Section 24.3.3(g).
24.8 Suspended Members
Subject to any penalties imposed pursuant to Section 24.1 or Section 24.3, during the period of suspension a suspended Member shall not be entitled to exercise the rights and privileges of Membership and without limiting the generality of the foregoing, the suspended Member:
(a) shall not be entitled to attend or vote at meetings pursuant to Section 12.2 and Section 12.3;
(b) shall remove from its premises any reference to its Membership in the Corporation;
(c) shall no longer use reference to its Membership in the Corporation in its advertisements, letterhead or other material;
(d) shall be designated as “Suspended” in the Corporation’s directory of Members; and
(e) shall continue to be liable for the payment of its Annual Fee pursuant to Section 14, other fees pursuant to Section 15 and any other fees, levies or assessments pursuant to any By-law, Rule or Policy of the Corporation.