Conducting Background Research

This page presents publicly available sources that may help you screen for negative information about people and companies your firm is considering doing business with. 

In the securities industry, background research looks for evidence of behaviour involving:

• Fraud
• Market manipulation
• Securities violations
• Offences involving theft, breach of trust, or greed
• Disregard for government or industry regulation
• Poor financial management
• Conflict of interest
• Negligence
• Dishonesty

There is no set template for a good background search. Your knowledge of the research task and the background of your subject puts you in the best position to decide when and how to do research. You will need to use your judgment for each research decision, including the choice of sources to search and research strategies to employ.

This background research toolkit is an educational tool that outlines common searches performed by Canadian researchers. The intent is not to provide a comprehensive list of sources that should be checked. Sources come and go and the information they cover, and provide access to may change over time. A good quality search may require the use of commercial, or paid, resources.

Investors and members of the general public may find the investor education sources such as InvestRight more practical, as all the sources listed are free and steps are easy to follow.

Identity

Before you begin a background check, it is important to know all you can about the individual or company you are researching. Sometimes you may even need to verify the identity of the subject of your search. There are several ways to confirm the identity of an individual or company.

Credit Checks

For an individual, you can verify identity through a credit check if you have consent. You can learn more about how to conduct a credit check in the Financial Background section of this toolkit.

Directories

There are many telephone directories on the Internet that can verify addresses and phone numbers. Sources such as Infobel can provide an overview of the directories for each country. Keep in mind that your local public library is always a good place to find telephone directories.

Personal Property Registries

All Canadian jurisdictions provide public access to the Personal Property Security Registry (PPSA). The databases generally provide records for security interests (e.g. loans, leases, liens) registered against property (e.g. a car or boat). PPSA databases can be good sources to find full names, addresses, and birth dates for individuals. You may also make use of land title records. You can look up property ownership with the name of an individual or company and find the address of properties they own which may be useful if you can't establish an address through other means. These provincial registries are listed in the Financial Background section of this toolkit.

Corporate Registries

Similarly, you can confirm the name, address and existence of a company by consulting the corporate registry where the company was initially incorporated. For incorporation sources, see the Company Information section of this toolkit.

Public Records

Unfortunately, there is no comprehensive source for Canadian public records. In the United States, sources such as Clear and LexisNexis may provide reports on individuals and companies that can include an individual’s date of birth, Social Security Number, current and historical addresses, and information on such topics as bankruptcies, judgments and liens.

Professional Qualification

Usually you can check a person's professional qualification through affiliated professional associations or regulatory agencies. For securities dealers and advisers in Canada, you can check registration through the national registration search on the Canadian Securities Administrators (CSA) website. You may also want to check the BCSC's Disciplined List for individual sanction information. This list includes all persons disciplined since 1987 including expired sanctions. There is also a national Disciplined List that is hosted by the CSA. This list includes sanction information about individuals and companies from all of the securities commissions across Canada and from the Canadian Investment Regulatory Organization (CIRO) of Canada, and the former self-regulatory bodies: the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association (MFDA).

Company Information

You can uncover potential conflicts of interest by finding out more about the companies with which your subject is closely associated. If an individual is in a position of control as a director, officer, or major shareholder, you may also research the company for any association with a business failure, scandal, or offence.

Private Companies

Commercial sources such as FP Advisor a service of FPInfomart and LexisNexis may provide information about private companies associated to individuals.

A commercial credit report, like those from Equifax, can contain information on officers and owners. More information on credit checks is covered in the Financial Background section of this toolkit.

Public Companies

All publicly traded companies are required to make regular filings. You can search through securities filings for Canadian public companies by the name of an individual using a commercial SEDAR+ service, such as DisclosureNet or Canada Stockwatch. If you do a text search for a person's name, you may find the roles they play in Canadian public companies.

Companies trading in the U.S., including many small Canadian companies trading on the OTCBB, file on EDGAR. Vendors that allow keyword searching of EDGAR filings include: DiscloureNet, 10KWizard, EDGAR Online, LexisNexis and Westlaw. Canada Stockwatch, and Bloomberg may be able to provide additional information about directors, officers and shareholders.

Major Shareholders

Search SEDI by name to find out if the individual is an insider of a Canadian public company. Directors, officers, and 10% security holders must report their trading in the stock of their company online through SEDI.

Databases accessed through LexisNexis and Bloomberg can be useful sources for identifying major shareholders

Employees

When considering the suitability of a candidate for employment in the securities industry, you may verify their educational proficiency by contacting the registration department of educational institutions to confirm information provided by the applicant.

Knowing the employment history of a person will help the firm determine whether the person has a history of past misconduct that may make the person unsuitable to be a representative of the firm.

Internet social network source such as ZoomInfo and LinkedIn can be used as supplementary source to verify education and employment history. However, user's discretion is recommended, as information may not be as reliable as other sources listed in this toolkit.

Company Directories & Financials

Many databases provide comprehensive information about companies including name, address, contact numbers, jurisdiction of incorporation, industry, parent companies and subsidiaries, financial information, trading data, and more. Commercial sources for this type of information include FPInformart, LexisNexis, Bloomberg, Yahoo Finance and Canada Stockwatch.

Canadian public company filings are available on SEDAR+. Commercial resellers such as DisclosureNet and Securities - Canada Centre on Westlaw Business provide more functionality for searching and display.

Companies listed on U.S. exchanges (AMEX, NYSE, NASDAQ) and those trading on the Over-The-Counter Bulletin Board file company reports through EDGAR. Commercial resellers such as 10KWizard, EDGAR Online, Lexis SEC Filings provide more searching and display options.

The Better Business Bureau can be a good supplementary source. It provides reports on businesses and charities in both Canada and US.

Incorporation

BC Online provides records on active and inactive companies incorporated in B.C. The corporate summary provides contact information including the names of directors and their mailing addresses, as well as the incorporation date and number. BC Online also links to documents that the company filed online (online filing began March 2004), such as articles of incorporation and annual reports.

You can search for federally incorporated companies on the Strategis: Corporations Canada website which also provides links to similar services in other provinces. OnCorp Direct now provides registration information not only on corporations registered in Ontario, but also on corporations registered in the rest of Canada as well as in the U.S.

Many U.S. states provide their corporate records online at the Secretary of States' websites. If you don’t know the state of incorporation, consider the Comprehensive Business Report from LexisNexis. It provides records of incorporation, limited partnerships, and fictitious business names for US states (excluding Delaware, which can be searched separately, either through DE Secretary of State from LexisNexis or Delaware Division of Corporations.)

Convictions & Litigation

You can identify whether an individual or company has been found guilty of a regulatory offence or criminal act or has been named in a civil lawsuit by searching through court records. Since the majority of cases that are filed do not go to trial, it is important to search for court actions as well as decisions.

Court Actions

Finding Canadian information in these areas can be challenging. There is no online public source that reports criminal cases filed in Canadian courts. If you have the consent of the individual, a criminal record check will provide this information..

.There is also no comprehensive source for civil court actions. However, the Equifax Commercial Law Record, provides summaries of commercial legal statements of claim and legal judgments filed in courthouses across Canada. This information may also be included in a corporate credit check.

Canadian courts keep records on all civil and criminal matters, but manually searching their registries is not practical. In most cases, you would need to know which jurisdiction the action began in, which can be difficult to ascertain. For British Columbia, Court Services Online provides search of court records for Provincial and Supreme civil court files in B.C., as well as provincial traffic and criminal court files. For other Canadian jurisdictions, there are many file search agencies that specialize in this kind of research. Journalists often check and report on court filings as a matter of course. As a result, you may be able to fill some gaps by using the sources listed in the News section of this toolkit.

U.S. records are easier to locate. There is almost complete coverage of civil, criminal, and bankruptcy filings in U.S. Federal District Courts (federal trial courts) available through PACER. The Party Case Index allows you to search by name. Full court dockets are available to subscribers. They summarize the filings and actions for each case.

Commercial sources such as Courtlink, LexisNexis and Westlaw may provide access to additional information from federal courts, U.S. Supreme Court, U.S. Courts of Appeals as well as some state and county courts.

Decisions & Judgments

The following sources provide the judgments of civil and criminal trials and their appeals. In Canada, the coverage of small claims and criminal cases in provincial court is selective. In the U.S., there is little coverage of judgments from state trial courts, and federal trial decisions are only selectively published. Verdicts in jury trials and case settlements are generally not available for Canada, but there are some summary sources in the U.S. News searches will help round out the record of verdicts, settlements, and trial decisions.

Canadian Decisions: CANLII provides free searching of judgments from most jurisdictions in Canada. LexisNexis and LawSource are two examples of commercial sources that may provide more information

U.S. Decisions: In the U.S., commercial sources such as LexisNexis and Westlaw offer the most comprehensive access to court decisions.

Criminal Records

Canadian criminal record checks can only be done with the consent of the individual. These checks are done through the police station where the subject lives and the costs vary by jurisdiction. You can request that the criminal record check include the U.S. and other jurisdictions.

In the U.S., there is more information available to the public, but a comprehensive criminal record check cannot be done online without consent. If you choose not to do a formal police check, consider these sources:

• Westlaw's Criminal Records Combined compiles data from court filings and Department of Corrections records for 39 states.
• The Federal Bureau of Prisons' Inmate Locator lists all federal inmates since 1982.

Regulatory Fines & Penalties

Searching the decisions and orders of securities, financial, and industry regulators can help identify past misconduct, regulatory violations, fraud, and negligence.

Securities Regulation

Regulators release decisions, settlements, orders, and news releases that identify individuals and companies who are alleged to have violated securities laws, rules, and regulations.

Canadian securities commissions publish decisions, orders, and settlements on their websites. Please visit the Canadian Securities Administrators’ (CSA) Disciplined List, available on SEDAR+. It is a complete list of disciplinary actions, and includes information from all of Canada's provincial and territorial securities commissions, the Canadian Investment Regulatory Organization (CIRO), and all former self-regulatory organizations: the Investment Industry Regulatory Organization of Canada (IIROC), and the Mutual Fund Dealers Association of Canada (MFDA).

IIROC's website includes decisions made by IIROC from June 2008 to present and decisions made by IIROC's predecessors, IDA (Investment Dealers Association of Canada) and RS (Market Regulation Services Inc.) from February 2003 to June 2008. The Notices and Guidance section of IIROC's website also provides decisions, orders, and settlements from the Toronto Stock Exchange and TSX Venture Exchange, as well as some pre-2002 decisions and orders from the Vancouver Stock Exchange, Alberta Stock Exchange, and Canadian Venture Exchange. Cease trade orders for companies and individuals are also included on SEDAR+, which is free of charge. You can search current and historical cease trade orders against Canadian public companies, their major shareholders, and their management. This includes CTOs for all provinces and territories but historical coverage varies by jurisdiction.

In Canada, Quicklaw, a commercial source, provides access to securities regulation decisions.

For U.S. violations, commercial sources such as LexisNexis, WestLaw and Knowledge Mosaic provide levels of access to information from:

• National Association of Securities Dealers (NASD)
• Securities and Exchange Commission (SEC)
• HUD (actions through Mortgage Review Board)
• Stock exchanges
• State mortgage regulators
• Media
• Other federal and state agencies

Taxation

Personal and corporate taxation compliance information can be obtained directly from the Canada Revenue Agency if you have the consent of the individual or organization.

The decisions of the Tax Court of Canada and appeals to the Federal Court and Supreme Court of Canada can be found using the sources listed in Convictions and Litigation. The sources listed there for U.S. decisions and judgments also contain U.S. tax decisions.

Financial Regulation

Some individuals and companies active in the securities markets are also licensed in related financial industries. Some enforcement decisions are available on the Internet but you often need to phone the relevant regulator for full coverage.

In British Columbia, relevant regulators include:

• Insurance Council of British Columbia
• Real Estate Council of British Columbia
• Financial Institutions Commission of British Columbia
• Superintendent of Real Estate
• Superintendent of Pensions
• Registrar of Mortgage Brokers
• Appeals are heard by the Financial Services Tribunal

Professional Discipline

Individuals who have been disciplined by a professional body may have a history of negligence, conflicts of interest, and disregard for professional regulation. Many disciplinary records are not available online. Check the website of the licensing body for instructions on obtaining a disciplinary history.

Contact the Canadian Investment Regulatory Organization (CIRO) if you have questions about the disciplinary history of a member firm or individual.

Quicklaw provides a Professional Responsibility Tribunal Decisions Global database that includes disciplinary records from all Canadian law societies and some other professional tribunals.

Industry Regulation

All companies and individuals must comply with some government regulation. Looking for a history of non-compliance can be done by considering the primary regulators for the industry and looking for regulatory orders and decisions on their websites. It may be necessary to call agencies to find out what information is available.

Financial Background

Bankruptcy

Past bankruptcies may indicate a history of poor financial management and excessive debt. Financial difficulties increase the risk of fraudulent behaviour.

Canada: The Office of the Superintendent of Bankruptcy provides an Insolvency Name Search. It includes reports of all personal and corporate bankruptcies and proposals filed since 1978 and records of all receiverships since 1993.

U.S.: Commercial sources such as LexisNexis, Westlaw and Clear may provide access to records of personal and corporate bankruptcies.

Credit Check

An individual credit report contains personal identifying information, current credit situation, and a six-year credit history including bankruptcies, judgments, loans, foreclosures, garnishments, and collections. You will need the written consent of the individual to complete a personal credit check.

A commercial credit report contains identifying information about the company, debt payment history, banking information, current credit situation, and a history of problems including bankruptcies, judgments, returned cheques, and collections. You do not need consent to do corporate credit checks.

Two companies provide personal and corporate checks in Canada and the U.S.:

• Trans Union
• Equifax

Liens

Liens are legal claims against a property that are used to prevent the sale of an asset such as a parcel of land or a vehicle. They occur when litigation is pending or when someone is trying to recover a monetary award. The presence of a lien can be a good indicator of past or present court actions but many liens are placed for routine reasons, such as a pending divorce, and these have less relevance for some background research tasks.

In Canada, liens can be found through a search of the appropriate provincial land titles registry or personal property security registry. Some jurisdictions also offer an integrated lien search. Depending on the province, you may be able to search the registries directly online using a credit card, or you may need to hire a registry agent to retrieve records for you. Use the table below to locate the jurisdiction and source you need.

Province/Territory	Personal Property Registry	Land Titles	Lien Checks
Alberta	Personal Property Registry	Land Titles Registry
British Columbia	BC Online	BC Land and Survey Authority
Manitoba	Personal Property Registry	Land Titles Office
New Brunswick	Atlantic Canada Online	Land Registry	Atlantic Canada Online
Newfoundland and Labrador	Service NL Personal Property Registry	Registry of Deeds	Atlantic Canada Online
Northwest Territories	Personal Property Registry	Land Titles Office	Atlantic Canada Online
Nova Scotia	Personal Property Registry	Land Registration	Atlantic Canada Online
Nunavut	Atlantic Canada Online	Nunavut Land Titles Office	Atlantic Canada Online
Ontario	Personal Property Security Registration (PPSR)	Real Property Registration Branch	Access Now: Personal Property Security Registration
Prince Edward Island	Atlantic Canada Online	Land Registry Office	Atlantic Canada Online
Quebec	Registre des droits personnels et réels mobiliers	Registre Foncier Du Québec En Ligne
Saskatchewan	Saskatchewan Personal Property Registry (SPPR)	Information Services Corporation of Saskatchewan Land Searches
Yukon	Personal Property Security Registry Search	Land Titles Office

Records of U.S. liens can be found in sources such as Clear and LexisNexis.

Terrorists/Money Launderers

With increased regulation, many new due diligence research services are becoming available that provide lists of organizations and individuals who are associated with money laundering and terrorism. It is important to evaluate the content coverage of these services to make sure they include the jurisdictions and sanction lists that are relevant to your research task.

News

Searching news archives for stories that mention an individual or company can help fill in gaps in your background information caused by incomplete online public records. News sources often report on settlements and court actions in progress that are otherwise inaccessible. They may also provide background information about the reputation of individuals and companies. News searches can help you to see a pattern of behaviour, information that you would not pick up through other sources.

FPInfomart provides Canadian news coverage, including major daily newspapers, small community papers, newswires, press releases, trade journals, magazines, blogs, broadcast news transcripts and live video content.

Newscan.com is another Canadian news aggregator with over 3000 sources from around the world as well as media websites and blogs.

Canada Stockwatch is a daily newsletter that frequently publishes investigative reports about Canadian public companies. Stockwatch can be accessed through Factiva. If you don't have access to Factiva, a subscription to Stockwatch includes access to a full electronic Stockwatch archive.

In the U.S. Lexis and Factiva offer large databases of news sources.

• Lexis: News, All
• Factiva
• Bloomberg News

Internet discussion groups are a news source in their own right and postings may contain unsubstantiated rumours and gossip that may be worthy of further investigation. Google Groups is a search engine for online discussion groups. Social media can also be sources for news and information.

Index of Sources

Download index of sources showing subject and geographical coverage.