Bill C-546: An Act to amend the Bank Act (compensation for investment advice)

C-546 Third Session, Fortieth Parliament, 59 Elizabeth II, 2010 HOUSE OF COMMONS OF CANADA BILL C-546 An Act to amend the Bank Act (compensation for investment advice) first reading, June 16, 2010 Mr. Mulcair 403182 SUMMARY This enactment amends the Bank Act to prohibit banks and authorized foreign banks, subsidiaries of banks and authorized foreign banks, and employees or representatives thereof from receiving any compensation from a person or entity in return for recommending that a customer of the bank or authorized foreign bank or subsidiary purchase an investment product sold by that person or entity. Also available on the Parliament of Canada Web Site at the following address:http://www.parl.gc.ca .vis1 {position: absolute;display:block;} .vis2 {position: static;} 3rd Session, 40th Parliament, 59 Elizabeth II, 2010 house of commons of canada BILL C-546 An Act to amend the Bank Act (compensation for investment advice) Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows: 1991, c. 46 BANK ACT 1. The Bank Act is amended by adding the following after section 458.3: Prohibition against compensation 458.4 (1) No bank or subsidiary of a bank, or employee or representative of a bank or subsidiary of a bank, shall accept any compensation from a person or entity in consideration for recommending that a customer of the bank or subsidiary of the bank purchase an investment product sold by that person or entity. Definitions (2) In this section, “compensation”« rémunération » “compensation” includes commission and non-monetary compensation. “investment product”« produit de placement » “investment product” includes stocks, bonds, mutual funds, index funds, hedge funds and derivatives, such as options or futures. Fine (3) Any employee or representative of a bank or a subsidiary of a bank who receives compensation in contravention of subsection (1) is guilty of an offence punishable on summary conviction and is liable to a fine equal to the amount determined by the formula A + B where A      is the monetary value of the compensation, and B      is an amount not less than $5000 and not more than $25,000, as determined by the court. Absolute liability of bank or subsidiary (4) If a person is convicted of an offence under subsection (1), the bank or subsidiary by which the person is employed or for which the person acts as a representative is absolutely liable to pay a fine in the same amount. Fine (5) Any bank or subsidiary of a bank that receives compensation in contravention of subsection (1) is guilty of an offence punishable on summary conviction and is liable to a fine equal to the amount determined by the formula A + B where A      is twice the monetary value of the compensation, and B      is an amount not less than $10,000 and not more than $50,000, as determined by the court. Additional penalties (6) A court may, in accordance with the regulations, impose penalties in addition to those referred to in subsections (3) and (5) if it considers it necessary to do so in order to deter further contraventions. Subsequent offences (7) If a person or a bank or subsidiary of a bank is convicted of a second or subsequent offence under this section, a further penalty shall be imposed in accordance with the regulations. 2. The Act is amended by adding the following after section 575.1: Prohibition against compensation 575.2 (1) No authorized foreign bank or subsidiary of an authorized foreign bank, or employee or representative of an authorized foreign bank or subsidiary of an authorized foreign bank, shall accept any compensation from a person or entity in consideration for recommending that a customer of the authorized foreign bank or subsidiary of the authorized foreign bank purchase an investment product sold by that person or entity. Definitions (2) In this section, “compensation”« rémunération » “compensation” includes commission and non-monetary compensation. “investment product”« produit de placement » “investment product” includes stocks, bonds, mutual funds, index funds, hedge funds and derivatives, such as options or futures. Fine (3) Any employee or representative of an authorized foreign bank or subsidiary of an authorized foreign bank who receives compensation in contravention of subsection (1) is guilty of an offence punishable on summary conviction and is liable to a fine equal to the amount determined by the formula A + B where A      is the monetary value of the compensation, and B      is an amount not less than $5000 and not more than $25,000, as determined by the court. Absolute liability of authorized foreign bank or subsidiary (4) If a person is convicted of an offence under subsection (1), the authorized foreign bank or subsidiary by which the person is employed or for which the person acts as a representative is absolutely liable to pay a fine in the same amount. Fine (5) Any authorized foreign bank or subsidiary of an authorized foreign bank that receives compensation in contravention of subsection (1) is guilty of an offence punishable on summary conviction and is liable to a fine equal to the amount determined by the formula A + B where A      is twice the monetary value of the compensation, and B      is an amount not less than $10,000 and not more than $50,000, as determined by the court. Additional penalties (6) A court may, in accordance with the regulations, impose penalties in addition to those referred to in subsections (3) and (5) if it considers it necessary to do so in order to deter further contraventions. Subsequent offences (7) If a person or an authorized foreign bank or subsidiary of an authorized foreign bank is convicted of a second or subsequent offence under this section, a further penalty shall be imposed in accordance with the regulations. REGULATIONS Regulations 3. Within six months after this Act comes into force, the Governor in Council shall make regulations for the purposes of (a) subsections 458.4(6) and (7) of the Bank Act, as enacted by section 1 of this Act; and (b) subsections 575.2(6) and (7) of the Bank Act, as enacted by section 2 of this Act. Published under authority of the Speaker of the House of CommonsAvailable from:Publishing and Depository ServicesPublic Works and Government Services Canada