The Canadian Securities Administrators (CSA) released its 2016 Enforcement Report this week. The ninth annual report highlights efforts taken across the country to deter and sanction wrongdoing in capital markets.
The CSA’s mandate is to facilitate Canada’s securities regulatory system, protecting investors from unfair, improper or fraudulent practices. One of the ways that the CSA hopes to fulfill its mandate is to streamline the regulatory process for companies wishing to raise capital, and for parties working in the investment industry.
"In 2016, CSA members continued with efforts to deter and sanction financial wrongdoing, with two jurisdictions implementing whistleblower programs, and a third partnering with law enforcement," said Louis Morisset, Chair of the CSA and President and CEO of the Autorité des marchés financiers. "The CSA is also addressing emerging issues, for example by creating a task force with financial institutions and international regulatory counterparts to address the growing threat of binary options investing, and developing a new national market analytics software program to identify potential misconduct."
Highlights from the 2016 Enforcement Report include:
- 39 years of jail time ordered for those committing securities-related misconduct.
- $299 million in compensation that respondents undertook to return to investors through no-contest settlements and $51 million in restitution and disgorgement orders.
- 120 people and 82 companies placed under interim and asset freeze orders, preventing further harm to investors.
The release of this report is timely, as the Supreme Court of Canada (SCC) just clarified an aspect of securities litigation, holding there will be no jury trials for securities offences. On February 24, 2017, the SCC dismissed two appeals from Alberta defendants seeking a right to trial by jury for Securities Act offences. The decision upheld the December 2015 rulings of the Alberta Court of Appeal.
The appellants, Ronald Aitkens and Jeremy Peers, are both facing changes under the Securities Act (though in unrelated cases). Aitkens and Peers argued that the maximum penalty under Alberta securities law of five years less a day in prison, or a $5-million fine, or both, triggers the right to a jury trial under section 11(f) of the Canadian Charter of Rights and Freedoms. This section provides a right to a trial by jury for any person charged with an offence with a maximum punishment of imprisonment for five years or a more severe punishment.
“This decision reinforces that securities offences will be tried in Provincial Court through the summary conviction process, as they always have been,” said Stan Magidson, Chair and Chief Executive Officer of the ASC. “The Alberta Securities Commission will continue to prosecute serious breaches of the Securities Act (Alberta) in Provincial Court in trials before a judge alone.”
The appeal was heard before all nine justices of the Supreme Court of Canada and in an unanimous ruling, the court dismissed the appeal substantially for reasons of the majority of the Court of Appeal.
The Alberta Court of Appeal ruling can be viewed here: R v. Peers, 2015 ABCA 407.
The Supreme Court of Canada decision can be viewed here: R v. Aitkens, 2017 SCC 14.