Tariffs-Free Regulatory Importing?
Asad Akhtar
Part Three: No Contest Settlements
The OSC adopted the use of no-contest settlements in 2014. No-Contest settlements
allow a respondent(s) to settle with the regulator without a formal admission of guilt.97 The OSC
anticipates this enforcement tool will allow them to close administrative proceedings cases
quickly and efficiently; freeing up vital resources to investigate serious misconduct and fraud
occurrences in the capital markets.98
A. The American Experience
No-contest settlements are heavily rooted in the American experience. Surprisingly, the
SEC’s initial enforcement strategy required a formal admission of liability for any settlement.99
This practice was reversed in the 1960s to the present day usage where a no-contest settlement is
the norm and an admission of liability is the exception.
1. Advantages
No-contest settlements provide considerable benefits for both the regulator and the
respondent. Settlements allow the agency to obtain prompt relief for investors without the risk,
delay and expense of litigation.100 The agency can avoid expending scarce resources that would
be better utilized in more serious breaches of securities law. Additionally, the lack of an
admission of guilt encourages companies to settle and cooperate with investigate proceedings.
Finally, the SEC has the discretion to refuse a settlement when it does not result in the
appropriate outcome for investors and/or provide the range in penalties if the proceeding
97
Supra note 88 at 15. To avoid the respondents denying the a llegations after the settlement is approved, they are
required to “neither admit nor deny” the claims by the regulator within the settlement.
98
Ibid.
99
Philip Anisman, “No-Contest Settlements and the SEC’s Recent Experience: Implications for Ontario”, (June 4,
2013) at 2, online: OSC .
100
Matthew G White, “SEC Alters Policy on “No Admit, No Deny” Settlements”, Baker Donelson (January 13,
2012) online: Baker Donelson .
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