The Alberta Securities Commission (the “ASC”) recently released the Credit For Exemplary Cooperation in Enforcement Matters policy (the “ASC Policy”). It joins the provinces of Ontario and British Columbia in encouraging persons and companies to self-report securities related misconduct and breaches of securities laws. The purpose of the ASC Policy is to explain the benefits of cooperating with the securities regulator and the factors the ASC will consider when granting credit for exemplary cooperation. Historically, securities regulators have faced difficulties in detecting securities related misconduct, and as such, regulators have come to see the merits in … Continue Reading
The Canadian Securities Administrators (CSA) recently released its annual report on the enforcement activities of its members. The CSA is an umbrella group of Canada’s securities regulators.
Summary of 2016 Results
Generally, enforcement and pre-enforcement activity, and monetary sanctions imposed by regulators decreased compared to 2015 but were higher than they were in 2014.
|Restitution, Compensation and Disgorgement||$349,654,379||$111,651,429||$65,717,760|
|Commenced Cases (by notice of hearing, statement of allegations, or sworn Information)||56||108||105|
|Most prevalent violations||Illegal Distributions|
The Canadian Securities Administrators (CSA) published on July 7, 2016 their priorities for the three-year period 2016 to 2019 under four categories: “Enhanced Investor Protection”, “Fair and Efficient Markets and Reduction of Risks to Market Integrity”, “Enhancement of Enforcement Effectiveness” and “Enhancement of Information Technology”.
The CSA states its strategic objectives without once mentioning the possible impact on it of the proposed national Cooperative Capital Markets Regulatory Authority (CCMRA) some of its members support. On July 22, it was announced that the CCMRA is expected to be operational in 2018.
Enhanced Investor Protection
The CSA proposes to … Continue Reading
The Ontario Securities Commission (OSC) released its draft Statement of Priorities for 2016-2017. The comment period ends May 9th.
Investor Protection Priorities
Advance Best Interest Standard – The OSC will recommend and conduct consultations on regulatory provisions to create a “best interest” standard for advisors. This standard is controversial for some industry participants but the OSC is committed to it. The OSC will also continue to focus on advisor compensation practices and identify those that are inconsistent with a “best interest” standard.
Compensation Arrangements in Mutual Funds – The OSC will regulate embedded commissions and … Continue Reading
Securities regulators across Canada impose significant monetary sanctions against market participants each year. The CSA recently reported that provincial securities regulators collectively imposed $138.3 million in fines and administrative penalties and $111.7 million in restitution, compensation and disgorgement orders in 2015. This was an increase of 102% from the previous year and the highest amount of monetary sanctions imposed since 2009.
At the same time that regulators are imposing increasing monetary sanctions, they are facing an increasing inability to actually collect these sanctions. For example, the British Columbia Securities Commission has collected less than 5% of monetary sanctions imposed … Continue Reading
On February 23, 2016, the Canadian Securities Administrators (CSA) released its annual report on the enforcement activities of its members. Enforcement and pre-enforcement activity has increased significantly in 2015. Monetary sanctions imposed by regulators more than doubled year-over-year and regulators concluded 38% more cases in 2015 even as the number of new proceedings increased slightly.
The 2015 Results
Monetary sanctions doubled: The regulators collectively imposed the highest amount of monetary sanctions on market participants since 2009, the year their investigation into the crash of the asset-backed commercial paper market was settled. In 2015, regulators imposed $138.3 … Continue Reading
In Beaudette v. Alberta (Securities Commission), 2016 ABCA 9, the Alberta Court of Appeal confirmed that the Alberta Securities Commission (the “ASC”) may share information compelled from Alberta residents with authorities abroad such as the Securities and Exchange Commission (the “SEC”) and the US Department of Justice (the “DOJ”).
The governing statutes of the ASC and other securities commissions in Canada grant powers to compel testimony and documents through summonses. These compulsion powers are meant to serve the regulatory function of securities commissions, they are not meant to assist criminal investigations.… Continue Reading
The OSC is close to adopting a proposed final version of its previously-announced whistleblowing policy (the Program). The Program would award eligible whistleblowers up to $5 million for reporting serious securities- or derivatives-related misconduct that leads to significant enforcement or settlement outcomes.
We summarized the original OSC consultation paper in a previous article. The OSC received comments on the consultation paper and also hosted a stakeholder roundtable on the proposals. Reporting issuers will want to re-examine their internal compliance and reporting systems, codes of conduct and employment agreements in light of the proposed program. Key features are summarized … Continue Reading
The Ontario Securities Commission (OSC) recently imposed harsher sanctions than were ordered by a panel of Investment Industry Regulatory Organization of Canada (IIROC) following a contested proceeding. The OSC’s decision has important implications in enforcement proceedings before IIROC.
The IIROC Decision (no suspension)
After a contested hearing, an IIROC Panel determined that Lucy Lukic, a registrant at an IIROC member firm, recommended off-the-book investments to her clients. Lukic had recommended securities in an investment fund that was owned and promoted by her husband, a fact that was disclosed to her clients. However, the securities were sold without a prospectus … Continue Reading
Fin mai 2014, le cours de l’action de Theratechnologies inc. (Thera) chute brusquement de 58 % en deux jours. Le marché réagit à l’annonce des sociétés d’analyse financière faisant état de risques potentiels suite à la publication par la Food and Drug Administration (FDA) américaine de certains renseignements recueillis durant son processus d’approbation relativement à un nouveau médicament de Thera, la tésamoréline, notamment de questions soulevées par la FDA concernant ses effets secondaires. Quelques jours plus tard, l’action de Thera reprend sa valeur initiale après l’annonce que la FDA avait approuvé son médicament.
Suite aux évènements, 121851 Canada Inc. (121Can), … Continue Reading
The British Columbia Securities Commission (“BCSC”) recently considered whether a short seller committed fraud and breached the public interest by making negative statements about an issuer that did not “fairly present the full results of the diligence underlying those statements”. This decision has important implications for public companies seeking help from securities regulators when short sellers publish negative research about them. Historically, public issuers have not received much assistance from regulators in these circumstances and have had to resort to defamation cases. The Silvercorp/Carnes case was a rare example of a regulatory intervention.
In the recent Weicker decision which followed a contested hearing, the British Columbia Securities Commission (BCSC) accepted Staff’s insider tipping and trading allegations against a geologist and his wife based on circumstantial evidence that included the “unnaturally timely” trading by the geologist’s wife.
Summary of Facts
BCSC Staff alleged that Robert Weicker, a geologist in a special relationship with Geo Minerals Ltd., informed his wife, Amina Weicker, about Geo’s impending takeover by New Gold Inc. before it was generally disclosed and that Ms. Weicker traded on this material non-public information.
At the relevant time, Geo was a junior mining … Continue Reading
Canadian Lawyer Magazine interviewed us last week on our recent post “OSC again uses public interest power to impose penalty where insider trading law technically does not apply”.
The Canadian Lawyer Magazine article is available online here: “OSC plays public interest card where insider trading didn’t apply”.… Continue Reading
Vous êtes aux prises avec une plainte disciplinaire d’un organisme d’autoréglementation, plus particulièrement l’Organisme canadien de règlementation du commerce des valeurs mobilières (OCRCVM). Vous êtes à regarder vos options dont, entre autres, celle de procéder à un règlement avec l’OCRCVM.
Lors d’un premier article nous avons traité du processus de fonctionnement du règlement. Nous avons également vu qu’il n’était pas possible de régler une faute ou un manquement.
Alors quel est l’avantage d’une entente de règlement?
L’avantage du règlement est d’abord d’éviter la tenue d’une audition devant une formation d’instruction, laquelle déterminera dans un premier temps s’il y a culpabilité … Continue Reading
Yesterday, the OSC approved a settlement agreement between OSC Staff and Anand Hariharan in a case involving allegations of tipping, insider trading and conduct contrary to the public interest. Hariharan agreed to a reprimand and significant restrictions on trading for 10 years. The settlement also envisages a disgorgement of profits but, surprisingly, only a portion of them.
Hariharan learned from a friend that a subsidiary of Loral Space & Communications Inc. (“Loral”) was going to be acquired by another company (“MDA”). Hariharan’s friend was an MDA employee and the acquisition was a material fact to both Loral and to MDA. … Continue Reading
In the recent Azeff decision which followed a contested hearing, the Ontario Securities Commission (OSC) accepted several insider tipping and trading allegations based on “firmly established” circumstantial evidence against an M&A lawyer and four registrants. Cases based on circumstantial evidence have been successfully contested by respondents in other cases in Canada.
Summary of Facts
OSC Staff alleged that, in connection with six separate M&A transactions between 2004 to 2007, a lawyer (Finkelstein) tipped his friend (Azeff), an investment adviser, and that four investment advisers (Azeff and his partner Bobrow, Miller and his associate Cheng) engaged in insider trading … Continue Reading
Vous êtes aux prises avec une plainte disciplinaire d’un organisme d’autoréglementation (« OAR »), plus particulièrement de l’Organisme canadien de réglementation du commerce des valeurs mobilières (« OCRCVM »). Vous êtes à regarder vos options dont, entre autres, celle de procéder à un règlement avec l’OCRCVM, de ladite plainte disciplinaire, cela soulève plusieurs questions :
- Comment fonctionne le processus de règlement?
- Peut-on régler sans reconnaître de faute?
- Peut-on régler de façon confidentielle?
Dans ce premier article, nous allons répondre à ces trois questions. Dans un article subséquent, nous répondrons à d’autres questions qui peuvent être soulevées dans le cadre d’un … Continue Reading
The Ontario Securities Commission (OSC) is inviting comment for the next 90 days on a proposed comprehensive whistleblowing program (the Program) which would award eligible whistleblowers up to $1.5 million for reporting securities law misconduct that leads to significant enforcement or settlement orders.
Yesterday, the OSC published a consultation paper outlining the key features of the proposed whistleblowing program and seeking public input on various aspects of the proposals. During the next 90 days, the OSC will be accepting comments on the consultation paper and will host a roundtable with various stakeholders to discuss the proposals. Before … Continue Reading
Dans l’arrêt Autorité des marchés financiers (l’ « AMF ») c. SNC-Lavalin inc. (« SNC »), la Cour d’appel du Québec a traité de l’aspect de la confidentialité et du huis clos des enquêtes de l’AMF.
Dans le cadre d’une enquête menée par l’AMF, cette dernière a requis d’un dirigeant de SNC qu’il communique certains documents, le tout assujetti d’une ordonnance l’empêchant de communiquer à quiconque toute information reliée à l’enquête, dont son existence, sa nature et les renseignements demandés, conformément à l’article 245 de la Loi sur les valeurs mobilières.
Cette ordonnance est par la suite modifiée, … Continue Reading
« GRC » c’est en fait le nouvel acronyme populaire auprès des institutions financières quant à leurs saines pratiques commerciales. En effet, GRC correspond à la Gouvernance, la gestion intégrée des Risques et la Conformité qui, selon l’Autorité des marchés financiers (AMF ou Autorité), sont à la base des saines pratiques commerciales.
À cet effet, l’AMF a publié en juin 2013 la Ligne directrice sur les saines pratiques commerciales, laquelle vise à énoncer les attentes de l’AMF à l’égard d’un traitement équitable du consommateur, soit le consommateur de produits financiers ou l’utilisateur de services financiers.
En précisant ainsi ses attentes, … Continue Reading
As we discussed in a previous post, the Ontario Securities Commission (OSC) rarely exercises its broad statutory discretion to interfere with and remake IIROC decisions. Last month, the OSC departed from this approach on two separate occasions.
First, in McQuillen, the OSC took the rare but not unprecedented step of setting aside as “manifestly unfair” a 2007 settlement agreement (the Agreement) between IIROC and Marc McQuillen (the Applicant). The OSC also ordered IIROC to expunge the Applicant’s related disciplinary record and to repay $25,000 in fines to the Applicant.
The Applicant entered into the … Continue Reading
Recently, a foreign bank settled a threatened enforcement action with the Ontario Securities Commission (OSC) based on allegations that the bank’s Toronto foreign bank representative office (FBRO) had engaged in trading and advising activities on behalf of Ontario residents without being registered or being able to rely on an exemption. The FBRO admitted that its conduct was contrary to Ontario securities laws as well as the public interest, and agreed to make a $500,000 settlement payment to the OSC.
The OSC became aware of irregularities following a 2011 Compliance Review (the results of which are summarized … Continue Reading
The British Columbia Securities Commission (BCSC) recently considered whether a consultant for a law firm had committed insider trading and breached the public interest when she traded a client’s shares with knowledge of undisclosed facts.
In Weiqing Jane Jin, 2014 BCSECCOM 194, there was no question that the consultant was in a special relationship with the issuer client and had traded while in possession of facts that had not been disclosed. The materiality of these facts was contested.
Confidentiality Agreement Was Not a Material Fact
The BCSC determined that it was not a material fact that the client … Continue Reading
The Canadian Securities Administrators (CSA) recently released CSA Staff Notice 51-341 setting out the results of their Continuous Disclosure Review Program for fiscal 2014.
The Program is used to evaluate compliance of reporting issuers (RIs) with continuous disclosure obligations and how regulators reacted in the year to deficiencies including referrals of RIs to enforcement, commencement of cease-trading proceedings, placing RIs on the default list, forcing refilings, and requiring changes in future RI filings.
The CSA conducted fewer reviews in fiscal 2014 (a 26% year-over-year decrease), but these reviews led to more serious consequences for issuers.
Almost … Continue Reading