Capital markets regulatory framework and enforcement

Things to know

  • Securities law is primarily a matter of provincial/territorial jurisdiction whereby each province/territory has 

  1. enacted legislation that governs securities transactions, as well as supporting rules, instruments and policies; and 
  2. established a securities commission or similar securities regulatory agency; and 

  • Canada does not currently have a national securities regulator. While there is an umbrella organization – the Canadian Securities Administrators (CSA), whose objective is to “improve, coordinate and harmonize” securities regulation in Canada – ultimate jurisdiction for the regulation of securities laws remains with the provinces and territories. 
  • Criminal prosecution of securities violations is a matter of federal jurisdiction, with the RCMP and local law enforcement agencies responsible for the enforcement of the securities-related provisions of the Criminal Codeof Canada. Provincial and territorial securities regulators do not have authority to investigate criminal matters or to pursue criminal prosecutions relating to securities law violations; rather these regulators are responsible for both the administrative and (to varying extents) quasicriminal enforcement of securities laws in Canada. 
  • Since 2013/2014, the provinces of British Columbia, Ontario, Saskatchewan, New Brunswick, Prince Edward Island, Yukon and the Government of Canada have been jointly engaged in the establishment and implementation of a single operationally independent cooperative securities regulator – the Cooperative Capital Markets Regulatory (CCMR). The CCMR will administer as-yet enacted federal capital markets legislation and a common provincial legislative regime. The provinces of Alberta and Québec are currently opposed to this initiative. 
  • Due in part to the multilateral nature of the Canadian securities landscape, Canada has historically not been seen as a fierce pursuer of white collar criminal convictions. However, Canada is coming under increasing international pressure to strengthen and expand its enforcement efforts.

  • There is extensive information sharing between the various provincial securities regulators in Canada and with international regulators – including the SEC – pursuant to various Memoranda of Understanding. 
  • Over the past several years, a number of non-traditional enforcement tools have been introduced at both the federal and provincial levels to help combat white collar crime, including 
  • the implementation of a no-contest regime as part of the Credit for Cooperation Program, seeking to enhance self-reporting, self-policing and self-correcting of conduct that runs afoul of securities laws (Ontario); 
  • the implementation of legislation for the automatic reciprocation of other securities regulatory authorities’ decisions (Alberta, New Brunswick, Nova Scotia and Québec); 
  • the implementation of whistleblower initiatives to encourage individuals to come forward with tips on possible violations of securities laws in exchange for anti-reprisal protections (Ontario and Québec); and 
  • a series of amendments have been proposed to Canada’s Criminal Codeincluding the introduction of a deferred prosecution agreement (DPA) regime.

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Shared from: Osler, Hoskin & Harcourt llp Publication

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