By KAREN HOWLETT
Monday, August 2, 2004 - Page B1
The Ontario government will hold
long-awaited public hearings this month on a key report that makes several
recommendations to reform the securities regulatory system.
The report by the Five Year Review
Committee, headed by corporate lawyer Purdy Crawford, outlines
shortcomings in the self-regulatory organizations that supervise Canada's
securities industry and with the accountability of the country's senior
regulator, the Ontario Securities Commission.
Queen's Park is at least a year behind
schedule in holding hearings on the report, which was tabled in the
legislature in May, 2003. Under former Premier Ernie Eves, the government
had planned to set up a committee of the legislature to review the
recommendations and report back by the fall of 2003.
The hearings are now set to begin
midmonth before the standing committee on finance and economic affairs,
and to extend over four days.
The OSC will be the focus of much of the
hearings, which will examine recommendations made by the
government-appointed Five Year Review Committee.
But even before the hearings begin, the
regulator is coming under criticism for not publicly releasing a separate
report it commissioned. Last year, the OSC quietly appointed a three-man
committee headed by Coulter
Osborne, the province's integrity
commissioner, to examine whether the OSC should be radically overhauled by
separating its potentially conflicting roles as both prosecutor and
The committee also includes David Mullan,
a retired university law professor and Toronto's newly appointed integrity
commissioner, and Bryan Finlay, a lawyer at Weir Foulds LLP in Toronto.
Mr. Mullan said in an interview that the
committee submitted the report to the OSC in February. "We assumed at some
point it would be released publicly," he said, but would not say what the
OSC spokeswoman Wendy Dey said the
commission plans to publicly release the Osborne report the same day OSC
chairman David Brown appears as a witness at the hearings. "I think it's
totally appropriate that we give the report to [the standing committee],
and that it becomes public that day, and not before this group that's been
asked to study it gets a chance to study it first," she said.
Securities lawyer Philip Anisman said the
commission should have released the report when it received it in the
interests of having a public debate on a matter of huge importance to
investors. "Maintaining secrecy of a report of that nature serves no
By waiting until the hearings begin
before releasing the report, the OSC is giving the public little
opportunity to digest it, he said. By doing so, the commission is being
"less open than it should be."
OSC said shortchanging public by
withholding Osborne report
DEBORAH BAIC/THE GLOBE AND MAIL
Lawyer Phillip Anisman says the
Ontario Securities Commission should have released the Osborne
report when it received it in the interests of having public debate
on a matter of huge importance to investors.
The government will begin
running advertisements in major newspapers tomorrow, inviting members of
the public to speak at the hearings scheduled for Aug. 18, 19, 23 and 24,
or send in written submissions.
Investor advocate Robert Kyle wrote a
letter to the standing committee expressing his concerns that the OSC, an
agency of the government, had not released the Osborne report.
The topics to be discussed at the
hearings are "of great concern to the investing public," he said. The
government of Ontario has publicly committed to transparency and
disclosure. The immediate release of this report would demonstrate that
Mr. Kyle said he wrote to the standing
committee because he had been told by OSC officials that it would be up to
Queen's Park to release the Osborne report.
In a letter to Mr. Kyle last week, Pat
Hoy, head of the standing committee, said it does not have a copy of the
As part of a motion passed in the
Legislature on June 29, the standing committee will review the structure
of the OSC's adjudicative tribunal and examine whether Canada's 13
provincial and territorial regulators should be replaced with a single
Both of these recommendations were
contained in the Crawford report, which said the government should review
whether to split the OSC's dual roles. The OSC both prosecutes securities
violators in Ontario and presides over disciplinary hearings, acting in
both a policing and judicial role. The Crawford report said this can give
rise to "perceptions of potential for conflict or abuse."
The report also recommends that the
government step up its oversight of the OSC. The Ontario legislature's
standing committee on government agencies has not reviewed the OSC since
1988, according to a review done by the Fraser Institute.
Self-regulatory agencies such as the
Investment Dealers Association of Canada also came under criticism. The
Crawford report says the IDA should consider having more individuals
outside the industry on its disciplinary panels. The panels typically
consist of two industry members and a retired judge, raising concerns
about their perceived independence.
The government set up the committee
headed by Mr. Crawford in 2000. The standing committee must report back to
the legislature by Oct. 18.
The Ontario Securities Act mandates that
the government review the OSC every five years. The government will no
sooner complete its review of the Crawford report before having to appoint
the next five-year review committee in December.
"Would we have wished it all to have
happened earlier?" asked Ms. Dey of the OSC. "Probably, but this is the
way it ended up."