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Globe says CIRO to use new enforcement tool

2024-05-07 08:13 ET - In the News

The Globe and Mail reports in its Tuesday, May 7, edition that the latest move by Canada's newly merged investment regulator, the Canadian Investment Regulatory Organization (CIRO), offers a glimpse into the future of investor restitution. The Globe's Clare O'Hara writes that currently, CIRO does not have the power to return money directly to harmed investors. Instead, it directs all monetary fines and repayment of ill-gotten profits (known as disgorgement) into a restricted fund. The money in the fund can only be used for a handful of reasons listed in CIRO's rules, such as investor education and research projects. However, in a recent disciplinary hearing, Vancouver-based Fortrade Canada accepted a settlement agreement with CIRO in which, among other remedial measures, it agreed to establish a $6-million (U.S.) compensation fund to directly return money to harmed investors. CIRO alleged Fortrade broke regulatory rules by making investment recommendations to clients and providing predictions on a particular company. CIRO also alleged that Fortrade failed to establish and maintain a supervisory system and failed to retain adequate records to demonstrate compliance, as required by CIRO rules.

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