As you might expect during a year following one financial crisis and during which another reared its head, 2011 saw more than its fair share of regulatory activity.

The year started out with twin regulatory shudders.

First, the MFDA responded to a British Columbia Securities Commission condemnation over the use of SRO staff to solicit proxy votes from MFDA members, ahead of a controversial vote that would extend the term limits for its board of directors. That vote took place at the annual general meeting in December 2008, prompting Partners in Planning to file a formal complaint saying the staff action could be construed as pressure to approve the amendment.

Then, the chair of the global CFA Institute advocated major changes in Canada’s regulatory regime. Marg Franklin called for a complete overhaul of the RCMP Integrated Market Enforcement Teams and said a single federal regulator would also improve protections for investors. Other critics pointed to underfunding as the root cause of regulatory ineffectiveness.

Major world organizations, including the International Monetary Fund, also raised questions about the soundness of Canada’s securities and banking oversight. The two major SROs, IIROC and the MFDA, later announced plans to team up on the development of a list of disciplined brokers and advisors. IIROC also made changes to its arbitration program that increases award amounts for complainants.

Adoption of a single market regulator, long discussed as a change agent to mitigate existing arbitrage, gained some traction during 2011; even as British Columbia openly joined Quebec and Alberta in their opposition to the federal mandate. Albertan Bill Rice’s assumption of the top job at CSA, which is charged with smoothing interprovincial rule differences, did little to sooth matters. And the CSA’s review of IIROC’s operations gave the self-regulatory organization a clean bill of health.

Others voiced the belief that advisors could cover off the work of regulators if they took their duty of care obligations to clients seriously. Fee transparency was also debated at length, but no signs emerged that advisors were prepared to drop commissions just yet.

Short selling got its day in the sun when IIROC sought comment on its universal market integrity rules, which govern the practice. CFAs cited derivatives as the most dangerous instruments being deployed by traders; and the CSA sought comments on how markets should handle them. New accounting and reporting standards also threaten new headaches for product manufacturers and distributors going forward.

Insurance regulators started the year with an issues paper saying they’d take a hard look at the activities of MGAs. Comments were also requested on how banks should operate within the insurance space. Both issues are still at the debate and blue ribbon commission stage.

An attempt by the London Stock Exchange to buy the TSX had its share of regulatory scrutiny, but was ultimately scuttled by vocal opposition.

Not all the 2011 rule changes were harsh. Banks and other financial institutions saw a relaxation of rules related to electronic communication with customers as well as the movement of client documents online. IIROC also gave its okay to certain uses of social media networking services by registered investment advisors. Neither set of changes, however, usurps requirements currently in place at companies; those must be altered on a case-by-case basis.

And, as advisors and distributors struggled with how they’d cope with point of sale requirements, the CSA deemed that delivery of the fund facts document would satisfy the spirit of the regulation.

2011 also saw a larger than normal tally of disciplinary actions from both IIROC and the MDFA:

IIROC MFDA
IIROC sets penalty against Blackmont Capital, Duke
IIROC slaps ex-advisor with $1 million fine
IIROC levies $1 million fine
IIROC fines Connacher half a million
Outside business activity fine tops $320,000
IIROC levies $300,000 sanction on advisor
KYC failure costs advisor $27,000
Supervisory lapse costs $25,000 fine
Personal dealings fine costs advisor $25,000
Suitability lapse costs $23,000
IIROC levies $10,000 fine for client pay-off
IIROC releases decision, penalty for Shamseer
Penalties in artificial bid case
IIROC announces settlement with Mary Louise Kasten-Brown
IIROC settles with Allan Mansfield Bush
IIROC finds against Brian Vaughn Wilson
IIROC reaches decision for Ronald Stoneburg
IIROC settles with All Group Financial Services
IIROC settles with Paul Ryan Klemke
IIROC settles with National Bank Financial
IIROC settles with Paul Clarke, Todd O’Reilly
IIROC settles with Gateway Securities
IIROC settles with Credit Suisse Securities
IIROC releases decision for Dennis
IIROC settles with Gary John Williamson
IIROC announces settlement with Richard Roy
IIROC announces penalty for Dale Richard Wells
IIROC settles with National Bank Direct Brokerage
IIROC sets penalty for Cooney, Jory Capital
Ontario Court of Appeal refuses Berry appeal
IIROC settles with Todd William Stefiuk
IIROC sets penalty for Benarroch, Kent, Glover and Credifinance Securities
IIROC fines, bans Michael Thomas Jones
IIROC sets penalty against O’Neill
IIROC announces decision for Bryan Dale Claggett
IIROC settles with Maison Placements
IIROC settles with Beacon Securities
IIROC bans, fines Marcel Anil Rada
IIROC settles with Donald Dean Mackenzie
IIROC announces decision for David Bruce Connacher
IIROC fines Cornacchia, Northern Securities
IIROC settles with Konstantinos Georgeos Arapis
IIROC fines CIBC World Markets
IIROC finds against Jean-Luc Beaudoin
IIROC finds against Natalie St-Amant
IIROC rules against Melaney Phillips
IIROC clears Christos Orestes Ilias
IIROC settles with Allan Mansfield Bush
IIROC settles with Elizabeth Maureen MorrisonIIROC settles with Morgan Stanley Canada
IIROC sets penalty hearing for Melaney Phillips
MFDA accepts settlement with Lambros
MFDA accepts settlement with Pan Chen
MFDA issues reasons for decision on Excel Financial Growth
Mallard wins a round in fight with regulators
MFDA makes findings against Sergio Gizzo
MFDA makes findings against Jones
MFDA settles with Calogero Arcuri
MFDA makes findings against Michael Franco
MFDA to hear Laurier Capital Planning settlement
MFDA issues reasons for decision in Gabrielson case
MFDA issues reasons for decision in Fanelli, Torchia cases
MFDA accepts settlement with Victor Lee
MFDA makes findings against Smith
MFDA finds against Tadeusz Bytnar
MFDA issues reasons against Calogero Arcuri
MFDA issues reasons against Partners In Planning
MFDA settles with Connor Financial, Joel Connor
MFDA issues reasons against Zenon Smiechowski
MFDA issues reasons for Jones decision
MFDA issues reasons in three cases
MFDA issues reasons for decision against Smith
MFDA settles with Laurier Capital Planning
MFDA settles with Gillian Gibson-Sargeant
MFDA finds against Wijaysri Sivasubramanian
MFDA issues reasons in Bytnar case
MFDA issues decision, reasons in Ryan case
MFDA issues reasons in matter of Chris McAuley
MFDA accepts settlement with Sentinel Financial
MFDA accepts deal with Queensbury Strategies
MFDA finds against Douglas Wellings
MFDA rules against Dickson
MFDA finds against Carmel Toussaint