On Friday, May 4, 2018, the Alberta Securities Commission (“ASC”) announced an addition to the Credit for Exemplary Cooperation in Enforcement Matters Policy (ASC Policy 15-601) (the “Policy”); namely, the ASC will allow respondents to enter into no-contest settlement agreements (i.e., settlements that do not require an admission of wrongdoing) in certain circumstances. This is a change from the ASC’s prior policy decision not to allow for no-contest settlement agreements, which we wrote about here.
Under the new Policy, no-contest settlement agreements can be used when: (i) the conduct is self-reported; (ii) respondents are co-operating with regulators; and, (iii) respondents are taking financial responsibility for their actions. A no-contest settlement agreement will not be considered in cases where the respondent has engaged in abusive or fraudulent conduct, or if it is in the public interest to proceed with a quasi-criminal or criminal investigation.
The ASC says that this new enforcement tool is intended to: (i) offer a new way to provide restitution and disgorgement to victims or those who have been harmed by securities misconduct; and, (ii) provide market participants with an opportunity to address their misconduct with efficiency and certainty. In addition, the availability of no-contest settlement agreements strengthens existing incentives in the Policy for individuals and companies to self-report violations of securities law.
The ASC’s announcement also brings Alberta in line with other jurisdictions, such as Ontario, which has allowed the use of no-contest settlement agreements since 2014. We have previously commented on a number of no-contest settlements reached with the Ontario Securities Commission (see here and here and here).
We anticipate that no-contest settlement agreements will be available only in very limited circumstances. Indeed, the ASC ultimately has the sole discretion to determine whether a no-contest settlement agreement is available in a particular case. It is likely that the ASC will exercise this discretion sparingly, in part due to the ongoing debate as to whether no-contest settlements are appropriate from a public interest standpoint (which we have previously written about here).