Are you being investigated?

Most often, an inquiry results from a request for an inquiry that can come from various sources. Upon receiving a request for an inquiry, the syndic may open an inquiry file and assign an investigator. For more information about requests for an inquiry, click here

The inquiry serves to determine whether or not the allegations in the request for an inquiry are well-founded. In essence, the inquiry is a process for collecting and analyzing information allowing the syndic or assistant syndic to have the most information possible in order to make the necessary decisions. At this stage, the representative being investigated is not facing any charges and is not guilty of anything whatsoever.

For more information about the inquiry process, click here.

It should be noted that the entire content of the inquiry file, including information about the identity of the persons involved, is kept confidential so as to maintain the integrity of the inquiry process at all times. Complainants, just as the members who are being investigated, must be able to give their version of the facts without worry.

The syndic may conduct an inquiry into the establishment of a firm, an independent representative, an independent partnership, a mutual fund dealer or scholarship plan dealer registered in accordance with the Securities Act.

The syndic may therefore have access to these establishments and examine and make copies of their books, registers, accounts and records and request any document relating to their activities. 

Moreover, every person having custody, possession or control of such books, registers, accounts, records and other documents must provide them to the syndic if the syndic requires it and must allow them to be examined, whatever their storage medium and whatever the means by which they may be accessed.

At this crucial stage, it is in the interests of any representative who is being investigated to cooperate with the syndic, the assistant syndic and the investigators, in order to ensure that the file contains all relevant information. In fact, sections 42, 43 and 44 of the Code of ethics of the Chambre de la sécurité financière and section 20 of the Regulation respecting the rules of ethics in the securities sector set out an obligation to that effect.

Failing to cooperate with the syndic’s staff during an inquiry is a serious breach liable to result in severe consequences affecting a representative’s right to practise.

Don’t forget that even if you choose to be represented by a lawyer, at the beginning or during the course of the inquiry, the obligation to cooperate with the syndic or a member of his staff is a personal obligation. Thus, although a lawyer can assist you, such as during a meeting, your lawyer cannot act on your behalf as long as a disciplinary complaint has not been filed.

Things you should not do:

• Fail to respond to a notice of meeting from the syndic or the assistant syndic;
• Contact the complainant or a witness after having been informed that you are being investigated.

Inquiry files are confidential. The syndic of the CSF is legally required to refuse to disclose information in an inquiry file, unless the disclosure is required by law.

Why is this so? The confidentiality is necessary in order to protect the various persons involved in an inquiry and to prevent any interference with the inquiry process. Legally speaking, the information and documents collected during the course of an inquiry are protected by the oath of discretion set out in the Professional Code. In addition, a number of these documents, if not all of them, contain nominative information protected by the Act respecting access to documents held by public bodies and the protection of personal information.

After analyzing the evidence, the syndic will decide on the outcome of the inquiry. He has three options:

(1) Close the file

The syndic will make this decision if he determines that none of the evidence supports the alleged offence or that the available evidence is not sufficient for him to discharge his burden of proof before the Disciplinary Committee. In such a case, he will send a notice to the person who requested the inquiry, indicating his decision not to file a complaint. He will also inform the person of the reasons for the decision and of the possibility of seeking the opinion of the Autorité des marchés financiers’ review committee. In such a case, the complaint may be filed directly by the person who requested the inquiry.

(2) Take an administrative measure

Verbal notice: If the syndic considers that the offence committed is minor and does not constitute a danger to the public, he will choose to give the representative a verbal notice.

Warning: The syndic will send the representative a warning if he considers it necessary to give a written reminder to the representative about his legal obligations. This measure can be used later if the representative faces another complaint.

A warning is made in writing and results in the file being closed. It is a document that sets out the breaches of the rules of ethics identified by the syndic and refers to the facts in the file and the relevant statutory or regulatory provisions.

(3) File a disciplinary complaint

The syndic may file a complaint before the Disciplinary Committee when he has reasonable grounds to believe that the representative has committed an offence under a provision of the Act respecting the distribution of financial products and services, the Securities Act or a regulation adopted under one of these statutes. Since the syndic has the burden of proof, he must prove that the representative committed the alleged offences. The syndic will inform the person who requested the inquiry that he has decided to file a disciplinary complaint.

In certain cases, the syndic can include with his disciplinary complaint an application for the immediate provisional striking off the roll of the CSF member.