On July 2, 2015, the Alberta Securities Commission (“ASC”) announced an enhancement to its cross-Canada enforcement of securities laws. Effective July 1, 2015, a new subsection (198.1) of the Securities Act (Alberta) will mean that most new orders and settlement agreements made by other securities regulatory authorities in Canada will automatically take effect in Alberta as well.How It Works
As outlined by the ASC in its recent press release, going forward, when another securities regulatory authority in Canada issues an order or enters into an agreement that imposes sanctions, conditions, restrictions or requirements on a person or company, it will automatically apply in Alberta. Furthermore, that order or agreement comes into effect in Alberta without notice to the person or company, and without a hearing. The order will have effect as if it were made by the ASC itself, with modifications as the circumstances require. If the original order or agreement is varied, amended or revoked, that change will also apply in Alberta. However, pursuant to subsection 198.1(8), monetary fines won’t be reciprocated (i.e., nothing in this subsection will require a person to pay the ASC any sort of administrative penalty, costs or other funds it may otherwise owe to another securities regulatory authority in Canada). Finally, under the new provision, orders or agreements by international regulators, such as the SEC, can be reciprocated in Alberta by an order of the ASC – but this will not occur automatically.Why It Was Implemented
Bill Rice, Chair and CEO of the ASC, is quoted in the ASC’s recent press release stating “this provision will take a good system of inter-jurisdictional reciprocation of enforcement decisions, and make it even faster and more effective… when there are findings or admissions of a breach of securities laws, or acts contrary to the public interest in another province or territory, sanctions such as cease-trade orders and director and officer bans will instantly have affect in Alberta as well. That’s a very positive step to protect Alberta investors and market participants”.Why It Matters
The Financial Post quotes Alison Trollope, Director, Communications and Investor Education, ASC, as stating that “Alberta is the first jurisdiction in Canada to enact such a law”. Prior to this, reciprocal orders could be imposed in Alberta, but the ASC was required to file a notice of hearing and carry out a separate process. This process provided certain protections to affected parties, who could object as a matter of fairness prior to the coming into force of a reciprocal order in Alberta. The new regime, therefore, may raise some unique due process issues – particularly in respect of those matters commenced outside of Alberta prior to the coming into force of this provision.
In any event, this marks an interesting move toward national co-operation from a provincial regulator that has thus far proven steadfast in its refusal to join the Cooperative Capital Markets Regulatory System. Currently, Alberta and Quebec are the largest provinces who have refused to participate in the federal government-backed plan to create a national securities regulator. But an automatic recognition of other Canadian securities regulatory authorities’ enforcement orders would presumably apply to decisions of the contemplated enforcement apparatus of the cooperative regulatory authority, including its contemplated adjudicative tribunal. As such, decisions of that tribunal would automatically be recognized and enforceable within Alberta, regardless of its participation in the regime, giving it a “more national than not” jurisdictional foothold, at least in respect of enforcement. It is interesting that this development coincides with Quebec’s recent announcement that it intends to launch a court challenge to the cooperative regulatory authority, arguing that Ottawa’s plan to create a securities regulator jointly run by participating provinces still violates Canada’s constitution. We continue to watch this and other developments relating to cooperation among and between provincial securities regulators with interest.