Investor protection got an important boost with the proposal to introduce the legislation to implement the recommendations of the Expert Panel on Securities Regulation, the “Hockin Report”. However, it remains to be seen whether the all important enforcement provisions make it into the legislation.
While most of the public discussion has surrounded whether a single securities regulator is possible with the high profile dissent of Alberta and Quebec, the significance of the Hockin Report lies in its clear and present focus on investor protection.
The measures recommended in the Report would provide welcome solace for investors who have had to navigate the patchwork of complaints and redress mechanisms on their own. Support for investors would come in several ways.
• a dedicated service to better inform and guide investors with complaints or seeking redress
• power to order compensation rests with the securities regulator- obviating the need for civil lawsuits
• establishment of an investor compensation fund
• mandatory participation in the dispute resolution process
The establishment of an Independent Investor Panel to represent and advocate the interests of investors in securities regulation would give a stronger voice to investors on a regular basis. It makes sense that the people most affected have a seat at the table.
The inadequacy of securities enforcement in Canada has eroded public confidence in the securities industry and the added anxiety of the current market downturn makes the need to strengthen securities enforcement even more urgent.
The Hockin Report endorsed the reform proposal submitted by the Canadian Coalition for Good Governance. “The proposal would establish a National Enforcement Branch under the auspices of a single securities commission. The Branch would have two distinct and independent Divisions; one Division would investigate and prosecute matters regarding administrative enforcement, while the other Division would conduct corresponding activities for criminal enforcement. Administrative matters would continue to be adjudicated by the independent adjudicative tribunal. Criminal matters would be brought before criminal courts presided over by judges that have the necessary expertise to properly adjudicate capital markets criminal cases.”
CARP strongly recommended a focus on investor protection in its submission to the Expert Panel and called specifically for a National Securities Enforcement Agency with a mandate to support investors as well providing the necessary expertise to prosecute offenders and order redress.
CARP recommended that such an enforcement agency be established regardless of whether the government was able to overcome the federal-provincial wrangling that might prevent the establishment of a National Securities Regulator.
The Hockin Report noted that the benefits of the changes would be diluted if there were not a single securities regulator and the draft legislation issued with the Report does not contain any provisions to implement the enforcement function. It remains to be seen whether the legislation tabled will include it.
The proposal marks a major advance in investor protection in Canada and is particularly welcome at a time of market chaos that has robbed so many older Canadians of their retirement security
