Investors Scrutinizing the Regulators

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OSC set to release structural review
Doug Watt
(August 11, 2004) The Ontario Securities Commission will release a long-awaited report next week on the regulator's overlapping role as policy-maker, investigator and adjudicator of the province's securities industry.

Last year, Purdy Crawford's five-year review of the Ontario securities industry suggested the regulator examine the appropriate structure of the OSC's adjudicative tribunal role on a priority basis to determine whether it "gives rise to perceptions of potential for conflict or abuse."

In response, the OSC created its own three-man committee to study the commission's quasi-judicial structure, led by Ontario's integrity commission, Coulter Osborne.

The OSC says the Osborne report will be tabled by commission chair David Brown on August 18 before the Ontario government's standing committee on finance and economic affairs, which has set aside four days of hearings on the Crawford committee's recommendations. Crawford is also scheduled to appear.

The Osborne report has been in the OSC's hands since April, but its contents remain a closely-guarded secret. One possible recommendation is the creation of an independent adjudicator, similar to Quebec's model.

The Ontario regulator's decision to hold off on a public release of the Osborne report until next week when the hearings begin doesn't sit well with some investor advocates, including Robert Kyle, executive director of the Small Investor Protection Association.

"I am very concerned that an agency whose mandate is to administer and enforce securities laws would choose not to share with investors the recommendations of thoughtful experts on the subject of OSC adjudication and conflicts of interest," Kyle wrote in a letter to the standing committee. "Release of the Osborne report would facilitate further thoughtful discussion at the Ontario standing committee on finance and economic affairs and implementation of necessary reforms."

Kyle says that since the contents of the report will be the subject of next week's hearings, "it does not make sense to expect the public to comment on a paper which is not before them."

In response to Kyle's letter, chair Pat Hoy said the standing committee does not have a copy of the Osborne report.

The standing committee will also touch on several other securities-related issues, including the five-year review committee's recommendations on the creation of a single national securities regulator. The standing committee's final report is due in October.

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com