Each year the Canadian Securities Administrators
("CSA"), an umbrella organization of Canada's
provincial and territorial securities regulators, release an
enforcement report which provides key details of enforcement
efforts in Canada's securities regulatory system. The CSA
recently released its
2015 Enforcement Report, which highlights the enforcement
statistics for securities regulators across Canada, including data
about the total fines and penalties imposed and the total number of
Some of the key points included in the 2015 Enforcement Report
were as follows:
Approximately $138.3 million was ordered in fines and
administrative penalties. This number was up significantly from
$58.2 million in 2014 and $35.4 million in 2013.
Approximately $111.6 million was ordered in restitution,
compensation, and disgorgement. This number was up from $65.7
million in 2014 and $54.9 million in 2013.
108 proceedings were commenced. The CSA classify a proceeding
as "commenced" where a CSA member staff has filed a
statement of allegations, sworn an Information before the courts,
or served a statement of offence in Québec. In 2014, 105
proceedings were commenced. In 2013, 112 proceedings were
The 108 proceedings commenced in 2015 involved 266 respondents:
165 individuals and 101 companies. By comparison, the 105
proceedings commenced in 2014 involved 281 respondents: 189
individuals and 92 companies. In 2013, the 112 proceedings
commenced involved 270 respondents: 160 individuals and 110
The 2015 Enforcement Report also highlights cases that were
concluded in 2015 which deal with fraud, illegal distributions,
misconduct by registrants, illegal insider trading, disclosure
violations, market manipulation, securities law prosecutions, and
Criminal Code prosecutions. A complete list of all
CSA-concluded cases can be found here.
As the 2015 Enforcement Report indicates, the total fines,
administrative penalties and compensation orders in 2015 were
approximately $250 million. This number is more than double the
total fines, administrative penalties and compensation ordered in
2014, which amounted to approximately $124 million. In an
interview with the Globe and Mail, CSA chairman Louis Morisset
stated that this jump in the quantum of enforcement orders reflects
the regulators' desire to send a strong signal of deterrence.
In Ms. Morisset's words, "the severity of sanctions is
important to ensure people who have in mind to not respect the
rules will understand there's a high price to pay for
In evaluating the effectiveness of securities regulators'
enforcement efforts, it is important to note that even while the
quantum of fines and restitutionary penalties imposed has nearly
doubled since last year, the total number of proceedings commenced
has remained effectively the same over the last several years. That
is, rather than prosecuting more offences or employing a wider
variety of enforcement mechanisms, the regulators are driving an
increase in monetary penalties by levying larger fines and
penalties on a per-case basis.
Given the public protection jurisdiction of the provincial
securities regulators, in our view, the activity levels and overall
effectiveness of these bodies is best measured by more meaningful
qualitative factors such as the number of cases and types of
matters pursued, the time it takes from the identification of
alleged wrongdoing to its resolution, and the length of
administrative hearings from commencement to full conclusion. The
total amount of fines and penalties imposed is, in our view, of
limited usefulness in evaluating the effectiveness of the regime.
While big dollar figures make headlines, they do little to protect
the capital markets if hundreds or thousands of other securities
law contraventions go undetected or unaddressed. Enforcement staff
ought to have a mandate and the tools available to investigate,
commence and prosecute a larger number of cases as efficiently and
timely as possible. Participants in the capital markets are best
protected when enforcement staff proceed with a view to minimizing
and mitigating harm done to investors through cease-trade orders
and other registrant suspensions and bans available under
securities legislation, rather than seeking to impose
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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