Tariffs-Free Regulatory Importing?
Asad Akhtar
Introduction
An American scholar once described Ontario’s capital markets as being “second-world
with third-world enforcement”.1 While this criticism may be overly sharp, many will agree the
enforcement record of the Ontario Securities Commission (the “OSC”) is an area of historical
weakness.2 In comparison to its American counterpart, the OSC has consistently trailed in
providing meaningful enforcement action in a reasonable period of time. In illustration, the
widely publicized failures in the Bre-X, Nortel, and Hollinger scandals have not helped to shake
the regulator’s image as a “toothless tiger”.3,4
However, not all appears dire for Canada’s largest securities regulator. The recent
adoption of enforcement practices and tools utilized by American regulators provides some
indication that the OSC may finally have a bite in responding promptly and effectively to
securities law breaches. This includes the adoption of: (1) incentivized whistleblowing, (2) nocontest settlements for administrative sanctions, and (3) the creation of a specialized taskforce for investigating 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 in the Ontarian capital markets. Ultimately, this paper concludes that
Tyler Hamilton, “Why the OSC so rarely gets its man”, The Star (December 01, 2007) online: The Star
.
2
Theresa Tedesco, “Ontario Securities Commission may get teeth, but it needs bite”, Financial Post (March 27,
2014) online: Financial Post .
3
Supra, note 1. While OSC succeeded in permanently barring Conrad Black from acting as a director or officer of a
public issuer in Ontario, this decision arrived more than eleven years after the initial allegation and was largely
contingent on the actions of law enforcement officials in the United States and the SEC.
4
Theresa Tedesco, “The OSC is bragging about its enforcement record, but there’s less than meets the eye”, (April
7, 2015) online: Financial Post < http://business.financialpost.com>.
1
7