Over the past week, the Globe and Mail
has come out with investigative pieces pointing out flaws in enforcement in the Canadian securities markets. Based on data from the CSA’s disciplined list going back 30 years, the pieces reported pervasive cases of recidivist offenders and violators that escape prosecution, to which the authorities seemed unable to respond.
In response, the Canadian Securities Administrators (CSA) has issued a statement saying its efforts were mischaracterized. Securities regulators, the CSA said, have no statutory authority to pursue criminal offences, which is why several regulators have partnered with law-enforcement authorities. “[F]or securities regulators to access tools under the Criminal Code (e.g. power of arrest, ability to execute warrants), police officers must be seconded to securities commissions,” it said. Sentencing in criminal cases, it added, falls to the courts.
The statement also noted information that the CSA said was missed in the coverage. Despite the primary role of law enforcement in investigating financial crime in Canada — a unit of the RCMP known as the Integrated Market Enforcement Team was set up for that purpose — the Globe
did not seek comments or reference statistics from such agencies, the CSA said. It added that the data from the disciplined list is incomplete as some securities commissions’ contributions to the database date back just over 10 years.
The CSA also pointed out securities regulators’ efforts to address misconduct in Canada’s capital markets, including statutory reciprocal order provisions, pursuing jail time when they have the authority, and educating investors on how to avoid fraud and dealing with non-registered firms or individuals.
“The CSA supports having a national dialogue about what more can be done to deter recidivists,” it said. “However, that discussion must be based on facts and must involve all participants in the justice system, including law enforcement.”
Regulator ignored red flags on mortgage investments
Regulators urged to boost protection for vulnerable investors
More market talk: