OSC moves to speed settlements

The Ontario Securities Commission (OSC) announced today a series of policy initiatives designed to further enhance the OSC’s enforcement regime for the benefit of investors and the capital markets.

Among the new policy initiatives is a program which would explicitly exempt a party from OSC enforcement action stemming from self-reporting of breaches of the securities act. The goal of the “no-enforcement action” agreement is to foster greater cooperation between reporting issuers and the commission.

These non-enforcement actions are aimed at breaking the cone of silence in a case of conspiracy to commit illegal insider trading.

“It’s very difficult to get at that information if people are conspiring to keep it away from us,” says Tom Atkinson, OSC director of enforcement. “We may be investigating a case, and all those parties involved will know that the first one in will maybe benefit from a non-enforcement action.

“It would apply to anybody acting in furtherance of a trade in securities.”

At the same time, the commission is clarifying the process for self-reporting to ensure that all parties are informed on how best to self-report and come forward with information.

The new initiatives would also provide public disclosure of credit provided by OSC staff for cooperation. The goal here is to provide greater certainty of potential outcome for all parties that may consider self-reporting.

“We’re trying to be more transparent in the credit we give to people who do cooperate; we do want people to understand that the quicker they come to us, the better it is,” says Atkinson.

The OSC has also introduced a “no-contest settlement” program, under which a protective order could be made in the absence of a specific admission by the respondent of a breach of the Securities Act (Ontario).

Taken together, these policy initiatives are expected to improve the quality, quantity and timeliness of information coming into the OSC. The new tools should also allow staff to expedite the resolution of enforcement matters.

“If we can resolve issues quicker, it allows us to divert our critical resources to other areas where investors are being harmed,” says Atkinson. “It allows us to resolve matters in a timely way, when they are affecting the market.

“With the speed the market moves these days, it’s essential that we remediate problems right away.” The OSC is seeking feedback on these policy initiatives, which will help inform staff on these and future enforcement initiatives. The comment period on OSC Staff Notice 15-704 Proposed Enforcement Initiatives is open until December 20, 2011.

Staff

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