Tariffs-Free Regulatory Importing?
Asad Akhtar
settlements have been a consistent component of American securities regulation and provide
numerous advantages to both the regulator and the respondent. For the regulator, they allow the
agency to expediently settle an issue without the risk, delay and expense of litigation. For the
respondent, it allows them to avoid the admission of guilt that could be used in a civil suit.
Despite its wide spread use, the tool has come under scrutiny that it fails to act in best interest of
the public. The District Court’s decision in Citigroup provided an enlightening illustration of the
challenges in utilizing this tool and what role the Court play in ensuring the public interest is
fulfilled in no-contest settlements.
While these comments were ultimately disregarded by the Court of Appeal, the OSC has
taken them into consideration in utilizing no-contest settlements in Ontario. Under Staff Notice
15-702, the OSC has narrowed the scope under which no-contest settlements may be offered and
has ensured transparency in the process by granting approval of no-contest settlements in public
hearings. Additionally, OSC Staff must demonstrate to the Commission that the settlement
serves in the public interest. To date, the OSC has utilized no-contest settlements in two
proceedings. In both proceedings, the settlements required adequate compensation to investors,
prompt and candid cooperation with OSC/SRO Staff, and remedial action by the respondents in
relation to their internal policies and procedures. If these cases are indicative of future
availability, it may effectively dispel many of the concerns surrounding the use of the tool and
succeed in balancing the need for expediency in administrative proceedings with that of
accountability.
Part Four examines the creation of the Joint Serious Offences Team (“JSOT”).
Canadian law enforcement and securities regulators have struggled with maintaining an active
enforcement presence in sophisticated mainstream securities transactions. This pales in
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