Board and Executive Duties
Duties of directors and executives
Directors and senior executives owe fiduciary duties - to act honestly and in good faith in the best interests of the organization - and a duty of care requiring the diligence of a reasonably prudent person in comparable circumstances. For a regulated dealer, these duties are layered with regulatory obligations: the firm must be managed in compliance with CIRO rules and securities law, and executives are accountable for establishing and maintaining a compliance culture. Candidates must distinguish the board's oversight role (strategy, risk appetite, CEO oversight, approving compliance frameworks) from management's operational role (implementing controls, supervising staff).
The compliance officer relationship
A central concept is the Ultimate Designated Person (UDP) and the Chief Compliance Officer (CCO), who have defined responsibilities and a degree of independence. The board must receive adequate compliance reporting; executives must ensure the CCO has resources and access. A recurring exam theme is that delegation does not eliminate accountability - a CEO cannot delegate away responsibility for a deficient compliance system.
Traps to watch
- Confusing fiduciary duty (best interests of the organization) with a duty to individual clients.
- Assuming the board should run day-to-day compliance; it oversees, management executes.
- Believing a well-liked, profitable firm is exempt from culture/conduct expectations.
- Overlooking the requirement for escalation and reporting to the board on significant compliance matters.
Rule of thumb
Ask: is this an oversight decision (board) or an operating decision (management)? Oversight sets direction and monitors; management implements and reports.