regulators often invoke U.S. Supreme Court Justice Louis Brandeis' quip
that "sunlight is the best disinfectant" when calling for improved
industry disclosure - yet they fail to live up to the motto. When it
comes to their own houses, regulators seem to prefer to sit in darkness.
The point was driven home
Globe and Mail recently
reported that the Ontario Securities Commission is going to court to block
the release of its 2000 audit of the Investment Dealers Association of
The report was ordered released by the
province's privacy commissioner last year.
The regulator claims that
if its critiques of the IDA were made public, it would be reluctant to
criticize the self-regulator, and the IDA would be reluctant to co-operate
with audits. How is this supposed to inspire public confidence in
the capital markets?
The same Orwellian
approach to disclosure informs the commission's handling of the
Osborne report. This
report was quietly commissioned in response to the
recommendation that the OSC consider whether its current structure should
be reformed, perhaps separating the adjudicative function. The
committee discreetly consulted with the Street on the issue. Public
input wasn't sought. And the inquiry's existence was revealed only when
Executive caught wind of it.
The committee delivered
its conclusions back in April, and the OSC promised to release its report
publicly. The commission now plans to release the report at its
appearance before a legislative committee convening in mid-August to hear
submissions on the Crawford committee's recommendations. This gives
others testifying before the committee three or four days at most to
consider the report, a disclosure strategy that seems contrived to hamper
informed comment and stifle public debate.
This might not be so bad
if the commission was just another supplicant lobbying legislators or
private pork, but this is a quasi -governmental organization charged with
defending the public interest, although it is funded by issuers and market
players. The problem is there's not enough transparency and
accountability among regulators. It's time legislators let in the