The securities regulatory model is founded on the principle of
disclosure – the more information an investor receives, the
better equipped she will be in making investment decisions –
or so the conventional thinking goes. Whether the current
disclosure requirements are sufficient and effective for protecting
investors remains the subject of active debate within the
regulatory community. For example, the recent conference hosted by
FAIR Canada and the Rotman School of Management's Capital
Markets Institute entitled "Does Disclosure Work" focussed on a number
of key questions that are front of mind for securities regulators, including whether
investors are able to adequately process, understand and use the
disclosure that they receive, how behavioral economics can assist
regulators to enhance the efficacy of disclosure, and what other
tools regulators can rely on to improve investor protection, such
as enhancing investor education and financial literacy and imposing
higher proficiency standards on investment advisors.
Meanwhile, as securities regulators work to enhance the
effectiveness of their standards, other regulators which have
previously been regarded as less active are being pressured through
regulatory competition to step up their games. As one recent report notes, the Financial Services
Commission of Ontario ("FSCO") is under increasing
pressure from the Ontario Securities Commission ("OSC"),
Investment Industry Regulatory Organization of Canada
("IIROC") and Mutual Fund Dealers Association to more
closely monitor the conduct of insurance agents who are also
licensed to sell mutual funds and securities.
The enhanced pressure for harmonization and coordination is not
surprising: given that investors may find it difficult to
differentiate between similar investment savings products that they
are offered (such as mutual funds, segregated funds and exchange
traded funds), albeit by industry participants regulated by
different regulators. The "point of sale" project
for retail fund disclosure was a collaboration amongst securities
and insurance regulators within the Joint Forum of Financial Markets Regulators
which recognized that similar financial products are often
regulated by different regulators in Canada.
The take-away for those in the investment financial advisor
community is that it is necessary to take a broader perspective on
the regulatory environment; insurance companies regulated by FSCO
must have regard to the activities of the OSC and IIROC, as the
standards imposed by the securities regulators might one-day become
the standards imposed by FSCO and other financial regulators.
In many cases, the best strategy for managing risk is to
consider the highest standards being imposed across the regulatory
field and work to meet them.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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