Earlier this week, the British Columbia Securities Commission (BCSC) released its 2014 Enforcement Report, which represents the first annual enforcement report to be published by the BCSC.
The 31-page report provides an overview of the BCSC’s enforcement activities in 2014 which consisted, in part, of 22 administrative and three criminal proceedings. In 2014, the BCSC handled 173 new cases. The most common violations included those related to unregistered activity, illegal sales of securities and fraud.
The report also discusses the results of two targeted BCSC initiatives. The first initiative addresses risks posed by the use of B.C. dealers and accounts in “offshore secrecy jurisdictions” to trade on inside information, manipulate the market, or engage in other forms of market misconduct. The enforcement efforts under this program are focused on foreign financial institutions trading for B.C. residents without registration and brokers engaging in offshore insider trading. Among others, in 2014 this initiative resulted in a settlement agreement with Bank Gutenberg AG for trading with BC residents without registration.
The second is the “Private Placement Review Program” which uses technology to analyze data from exempt distribution reports, along with other internal and external sources, against a preset list of 38 “risk indicators” to identify companies that may post a high risk in the private placement market. Several cases were opened, with one resulting in findings of fraud, illegal distributions and breach of a cease trade order and another ending with a settlement and payment of a fine.
In terms of enforcement tools, in 2014, the BCSC obtained 716 production orders, 58 cease-trade orders and froze $22.36 million in assets. In 2014, the average case took 15.1 months to reach a settlement or an enforcement decision. In 2015, the BCSC anticipates that the average case will take 22 months to reach a resolution.