In a bid to resolve enforcement matters more quickly and
effectively, the Ontario Securities Commission today announced a series of proposed enforcement
initiatives that would include permitting market
participants to enter into no-contest settlements.
According to the notice, the timeliness and effectiveness of OSC
investigations are currently being affected by the concerns of
those being investigated that actions taken in response to an
investigation may prejudice concurrent or potential civil
litigation. As such, the OSC has proposed the following
No-enforcement action agreements - Such
agreements would be explicit in circumstances where market
participants self-report and immediately remediate, and would be
available in a number of situations. OSC Staff could also consider
an agreement where a self-reporting party also reports in respect
of the conduct of other parties where the conduct in question was
jointly carried out. While Staff have simply advised participants
that no action will be taken under the current processes, the
proposals would make their decisions explicit with the result of
greater certainty for market participants.
No-contest settlement program - Although
recent amendments to the OSC's Rules of
Procedure(Rule 12) have eliminated the explicit
requirement for admissions in settlement agreements to be presented
to a Commission panel for approval, settlement agreements generally
include an admission of facts and of non-compliance with Ontario
securities law or conduct contrary to the public interest. The
program will therefore allow cooperative respondents to resolve
enforcement matters without admitting facts or to non-compliance
with securities law. Such settlements would have to meet the public
interest requirements set out in the Securities Actand
would be limited to respondents not previously subject to
enforcement or regulatory activity by the OSC or another
Clarified process for self-reporting - This
proposal would introduce a proffer process to provide greater
transparency and certainty for self-reporters.
Enhanced public disclosure for credit granted for
cooperation - The proposal would enhance disclosure
regarding the credit granted for cooperation in respect of
proceedings before hearing panels, settlements and matters relating
to the proposed no-enforcement action agreement.
The OSC is accepting comments on its proposals until December
In addition to these proposals, the notice also states that OSC
Staff are examining the prospect of introducing a new whistleblower
program, under which incentives would be provided to persons who
provide information about marketplace misconduct. If implemented,
this would be a first for securities regulators in Canada. The
whistleblower program is currently the subject of ongoing study,
and an OSC notice inviting public comment may be published in the
near future. Aswe discussed earlier this year, the SEC
implemented its own whistle-blower bounty program in response to
Dodd-Frank mandated requirements.
The Canadian Office of the Superintendent of Financial Institutions ("OSFI") recently ruled that a bank cannot promote comprehensive credit insurance ("CCI") within its Canadian branches under the Insurance Business (Banks and Bank Holdings Companies) Regulations (the "Regulations").
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