Canada: Alberta Securities Commission Policy 15-601: Credit For Exemplary Cooperation In Enforcement Matters

In October 2017, the Alberta Securities Commission (ASC) released ASC Policy 15-601: Credit for Exemplary Cooperation in Enforcement Matters.  According to the ASC, Policy 15-601:

... provides clarity and transparency regarding the circumstances under which ASC staff will consider exercising their discretion to grant credit to those individuals or entities that provide exemplary cooperation to ASC staff in the course of enforcement matters. This exemplary cooperation is cooperation above and beyond mere compliance with obligations under Alberta securities laws.[1]

Policy 15-601 follows the issuance of the ASC Three-year Strategic Plan F2018-2020[2], which had followed a consultation and review process conducted in 2016.

Prior to the release of Policy 15-601, it had been the stated practice of the ASC to allow credit to those who "fully cooperate with ASC staff in enforcement matters in a timely manner." According to the ASC, Policy 15-601 now "explains the use of discretion by ASC staff when considering the appropriate enforcement action and assessing the appropriate sanction for misconduct."

Application and Purpose of Policy 15-601

Policy 15-601 does not apply to any matter that results in quasi-criminal or criminal proceedings. Section 10 of the Policy sets out certain factors that may give rise to quasi-criminal or criminal investigation (for example, conduct that involved fraud).

The Policy states that its purpose is to explain "the benefits of cooperating with ASC staff and the factors ASC staff consider when determining whether that cooperation earns Credit in enforcement matters." "Credit" is defined as something that "may include" any of the actions enumerated in section 12.  Section 12 sets out examples of credit for "Exemplary Cooperation", which in turn is defined as including the actions in section 6.

"Exemplary Cooperation"

Section 6 sets out "What the ASC Expects" in terms of earning Credit for Exemplary Cooperation.[3]  This includes "Self-reporting"[4]; full disclosure; full cooperation; making employees, officers and directors available for interviews[5]; and the taking of "Corrective Action".[6]

Credit for Exemplary Cooperation

Section 12 of Policy 15-601 provides that if there has been Exemplary Cooperation, ASC staff may, among other things, narrow the scope of staff's allegations; proceed on the basis of a joint recommendation for sanction, or limit the costs that they would ordinarily seek.[7]

Section 20 provides that the ASC may disclose or publicize examples of Credit that have been granted for Exemplary Cooperation.

No Enforcement Action Agreements

Policy 15-601 provides that in very limited circumstances ASC staff may agree to take no enforcement proceedings.  Staff's considerations will include whether there has been Exemplary Cooperation, the nature of the impugned conduct and resulting harm, and whether the conduct has been stopped and harm rectified.

Settlement Agreements and Agreed Statements of Fact

While Policy 15-601 contemplates that ASC staff have the discretion to enter into agreed statements of fact or make joint submissions on sanction, it emphasizes that an ASC Hearing Panel is not obliged to accept either.

No ASC Policy on No-Contest Agreements or Whistleblowing – Yet

At the time of this publication, the ASC is developing, but has not finalized, policies on no-contest settlement agreements and whistleblowing.

While it remains to be seen, we expect that the ASC will determine to allow no-contest or no- admission settlement agreements in limited circumstances – something far short of what we have seen allowed by the SEC and perhaps short of that allowed by the OSC.[8]  No-contest/no-admission settlements can be very significant to market participants who seek to narrow their exposure to follow-on litigation such as class actions.

The ASC has stated that it is considering the development of a whistleblower program to motivate people within organizations to provide tips regarding serious violations of Alberta securities law. We expect that the ASC will issue a whistleblower policy which provides for confidentiality and protection of retribution, but does not provide for financial rewards.


[1] ASC Notice dated October 16, 2017.


[3] Section 11 sets out instances where no Credit will be given.  In general terms, section 11 contemplates conduct that is to the opposite effect of the conduct contemplated by section 6.

[4] "Self-report" means "voluntarily reporting yourself for your own possible securities misconduct or breach of Alberta securities laws, including reporting any of your conduct that may be harmful to the Alberta capital market or contrary to the public interest."  Sections 15 through 17 provide for certain conduct that must take place in order to Self-report as contemplated by the Policy.  One requirement is that the self-reporter must attend an interview with ASC staff to provide further information and respond to questions.

[5] Section 7 provides that if requested, the ASC may issue a summons or production order before anyone is required to speak to the ASC or provide documents.  (These are often requested to afford the witness available protection under applicable evidence statutes.)  Section 7 provides that such a request will not been seen as a failure to cooperate so long as the witness is cooperative in scheduling and attending the interviews or providing the records within a reasonable time.  Section 7 concludes: "Everyone is expected to be forthright and forthcoming when speaking to ASC staff."

[6] "Corrective Action" means Voluntary and timely conduct aimed at reducing harm done to participants in the Alberta capital market and preventing future breaches of Alberta securities laws.  "Voluntary" means something not required by law.  This is reinforced in section 8, which states: "Compliance with Alberta securities laws alone is not Exemplary Cooperation and will not earn any Credit."

[7] Section 13 provides for the receipt of partial Credit for Exemplary Cooperation that was not initially given but was later given.

[8] The Ontario Securities Commission has allowed such settlements since 2014, and at the time of publication it is our information that there have been 9 such settlements.

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