Over the past year the OSC has intensified its enforcement efforts and these efforts have produced much improved results.  Major challenges remain especially with investigation and prosecution of non-complaint emerging market listed companies.  OSC staff proposed a number of policy initiatives to enhance its enforcement toolkit in OSC Staff Notice 15-704 (the “Staff Notice”).

FAIR Canada has provided comments on the proposed enforcement initiatives.  FAIR Canada supports the proposals for No Enforcement Action Agreements and the general initiative to beef up enforcement.  However, we are concerned that the proposed no-contest settlement program will make it more difficult for investors to recover losses and will not further deter corporations and individuals from violating securities laws.  We do not agree that the OSC should seek “regulatory neutrality” as between wrongdoers and victims.  If the OSC introduces no contest settlements, we recommend that there be further restrictions so that cases are only eligible (a) where there is no harm to investors, or (b) where the defendant(s) will provide fair and reasonable compensation to aggrieved investors.

We also urge the OSC to institute a whistleblower program as soon as practicable in order to aid in its mandate to protect investors and foster confidence in our capital markets.  We further recommend that the Ontario Ministry of Finance take the steps necessary to give the OSC the power to order financial compensation for aggrieved investors (thereby eliminating the need for investors to go through the courts to obtain compensation for financial loss).

The OSC has recently indicated it is going to conduct a public hearing on its enforcement proposals in the New Year and has extended the filing deadline for submissions.