Underwriter Liability: IIROC’s Guidance On "Reasonable" Due Diligence

In the waning days of 2014, the Investment Industry Regulatory Organization of Canada (IIROC) published its final Guidance Note on due diligence by Dealer Members in underwritten public offerings of securities. IIROC stated that its Guidance was designed to promote consistency and enhanced standards by setting out the key elements of the underwriting due diligence process; the types of policies and procedures needed by Dealer Members to support the underwriting due diligence process; and an appropriate supervisory and compliance structure.  Although IIROC was at pains to clarify that the Guidance Note was not intended as a minimum or maximum standard of what constitutes reasonable due diligence nor to create new legal obligations or modify existing ones, underwriters will want to carefully review their existing policies and procedures in light of the Guidance Note. IIROC also specifically noted that the Guidance is intended to inform its compliance reviews of Dealer