The Canadian Securities Administrators (CSA) released its 2016 Enforcement Report late this month, reporting a drop in both the number of new enforcement cases initiated as well as the number of cases concluded in 2016.
Despite this decline in overall enforcement activity, the CSA reported a significant increase in the amount restitution, compensation and disgorgement ordered in 2016, from $111,651,429 in 2015 to a whopping $349,654,379 in 2016. The historic amount of compensation ordered in 2016 was attributed largely to four Ontario Securities Commission (OSC) “no-contest” settlements totaling $299,243,586.
The OSC’s use of no-contest settlements has become a powerful tool in the OSC’s enforcement arsenal. No-contest settlements were first introduced in 2014 through OSC Staff Notice 15-702: Revised Credit For Cooperation Program with the goal of achieving a more efficient and timely resolution of enforcement matters. The defining feature of these settlements is that respondents can agree to settlement terms without any admission of wrongdoing. Critics of no-contests settlements decry this feature as creating a lack of transparency, and have voiced concerns that that the goal of deterrence cannot be met without accountability (and the accompanying risk of civil liability).
We will be taking a closer look at the OSC’s use of no-contest settlements, from their 2014 inception to present day, in next month’s AUM Law Bulletin. Stay tuned…