Securities enforcement in Canada in 2010

The Canadian Securities Administrators (CSA) 2010 Enforcement Report was released earlier today, and outlines how Canadian securities regulators are working to detect and disrupt misconduct in Canada’s capital markets.

The report shows actions by Canadian securities regulators led to more than $63 million in fines and administrative penalties in 2010 from 174 cases involving 207 people and 100 companies.

Locally, the Nova Scotia Securities Commission investigated 57 complaints and issued $219,000 in administrative penalties in 2010.

The commission also concluded ten cases against 11 defendants. Three involved illegal distributions, two cases dealt with market manipulation, four cases of registration misconduct, and a single case of conduct not in the public interest.

One of the notable highlights in the report indicates that in 2010, more proceedings were concluded before provincial courts, which, in some cases, handed down jail sentences.

Under securities legislation, securities regulators can bring cases before an administrative tribunal or a provincial court where they can seek sanctions that can include jail terms for breaches of securities law. In 2010, the total number of cases of securities laws violations that CSA members concluded before courts increased by 83 per cent. In these cases, courts ordered jail terms for 15 individuals, ranging from approximately three months to three years.

The CSA’s 2010 Enforcement Report comes out in advance of Fraud Prevention Month in March, which highlights the tools and resources available to Canadians to recognize and avoid investment fraud.

Key highlights of the CSA’s 2010 Enforcement Report:

• 64 of the concluded cases were court proceedings (up from 35 in 2009), which resulted in the courts ordering jail terms for 15 individuals ranging from approximately three months to three years
• 115 of the concluded cases involved illegal distributions, which represented the largest category of concluded cases
• 174  cases concluded involving a total of 207 individuals and 100 companies that  resulted in:
  • Fines and administrative penalties of more than $63 million
  • Approximately $58 million in restitution, compensation and disgorgement ordered or agreed to in a settlement

• 41 interim orders restricting trading against 98 individuals and 89 companies to protect investors while securities regulators investigated allegations of capital market misconduct
• 74 orders by securities regulatory authorities or courts were reciprocated thereby extending the original sanctions to other jurisdictions
• 178 matters commenced against a total of 301 individuals and 183 companies