Tariffs-Free Regulatory Importing?
Asad Akhtar
Executive Summary
The Ontario Securities Commission (“OSC”) has consistently lagged its American
counterpart in providing prompt and meaningful enforcement action in the capital markets. The
Commission seeks to remedy this problem with the introduction of three new enforcement tools
and practices: (1) incentivized whistleblowing, (2) no-contest settlements for administrative
sanctions, and (3) the creation of a specialized task-force for serious securities frauds. This
paper will examine the proposed framework for these policies in light of the American
experience. This will include a determination of any opportunities or challenges that may exist
in its application.
Part One discusses two key distinctions between the Canadian and American capital
markets: (1) the lack of a national securities regulator, and (2) the public interest jurisdiction
present with many provincial regulators. Canada is the only developed country to lack a national
securities regulator; in its place, the markets are regulated by provincial regulators. The lack of a
federal regulator has negatively impacted Canada’s ability to address systemic risk, collect data,
lower costs and streamline administration processes in the capital markets. If successful, the optin Capital Markets Regulatory Authority (“CCMR”) seeks to resolve many of these issues. The
public interest jurisdiction is a broad and unique enforcement tool that the OSC can utilize to
capture erroneous behavior that does not explicitly violate the Act. However, the OSC’s
continued reliance on the tool as a punitive measure has been considered conflicting and has
recently been met with some restraint.
Part Two inspects the proposed incentivized whistleblower program by initially
considering the rich Ame