The Ontario Securities Commission (OSC) and the U.S. Financial Industry Regulatory Authority (FINRA) entered into a Memorandum of Understanding (MOU) earlier this month. FINRA is the largest regulator of securities firms doing business in the U.S. The MOU is intended to facilitate the OSC and FINRA exchanging information on firms and individuals that are under their common supervision. The MOU is subject to approval by the Ontario Minister of Finance.
In the past, Canadian recipients of FINRA inquiries into trading activities sometimes declined to provide information on the basis that FINRA was not empowered to collect this information in Canada. The MOU provides for unsolicited and solicited information sharing. Under the terms of the MOU, the OSC and FINRA may share unsolicited information that they believe would be helpful to the other authority in their regulatory activities. In addition, the OSC and FINRA will endeavour to provide full assistance to each other in obtaining information that may be maintained by or available to them through their regulatory activities (including in their regulatory supervision of other authorities). Requests for assistance will be assessed on a case-by-case basis.
The type of information shared between these authorities may include “trading activities, the registration and licensing information of supervised individuals or bodies, their disciplinary history, and with respect to supervisory examination and inspections, the substance of inspection reports (any and all issues identified and addressed during such examinations or inspections, actions (and action plans) taken in response to issues identified, and all outstanding issues), information on the transactions (name of client buy side/sell side, name of intermediary, and reason for operation),” and any other information mutually agreed upon by FINRA and the OSC.
Two important exceptions to information sharing are: (a) where a criminal proceeding relating to the same facts against the same persons has already been commenced in the jurisdiction from which the request is made; and (b) the same persons have already been the subject of final punitive sanctions (unless the requesting authority can demonstrate that the relief or sanctions sought would not be of the same nature or duplicative of those imposed by the other requested authority).