Investors Scrutinizing the Regulators

Home Page


Securities Regulation In CanadA

Fox Guarding the Hen House

Report favours independent securities tribunal
Doug Watt
(August 18, 2004) There is a "persuasive and overwhelming" argument for separating the adjudicative function of the Ontario Securities Commission and creating a new independent body, a report released today concludes. But the chair of the OSC believes Ontario might be better off maintaining the status quo.

The report, written earlier this year by a three-person committee chaired by lawyer Coulter Osborne, states that a "clear case for separating the commission's adjudicative function from its other functions has been made. We therefore recommend that a securities adjudicative tribunal be established."

Creating an Ontario Securities Tribunal would alleviate the pervasive and widely held perception that a fair hearing before the OSC is not possible, the report says, because of the commission's overlapping roles of policymaker, investigator, prosecutor and adjudicator.

The Osborne report was tabled today at Queen's Park by OSC chair David Brown, who concedes he is "of two minds" regarding its conclusions.

"Perception is very important," he said. "But the integrated model appears to be working quite well," adding that it's the standard for other administrative agencies across Canada, and not just in the area of securities regulation.

"The perception issue is one that people want to address, but to split the commission into a separate tribunal strictly for the perception issue, ignoring all the reasons why we have so many integrated agencies across the country, I think would be a mistake," Brown told reporters after his appearance before the standing committee on finance and economic affairs, which is scheduled to deliver its recommendations on the subject to the provincial government in October.

In addition, Brown notes that the creation of an independent tribunal would risk the loss of the securities-related expertise currently within the OSC. "You're not going to get the kind of people you need for that tribunal," he said, pointing out that such a tribunal might be more feasible if Canada had a national securities regulator.

"You can't have someone sitting on a tribunal who is still active in the business world in a way that would conflict with cases brought before it. So you'd be asking people with the expertise to give up those associations to sit on a panel."

But Brown did not dismiss the Osborne report's recommendations entirely. "If we can conceive of a different and better model, I think we should go for it," he said. "But I think we are better off leaving the structure as it is," he said.

IFIC president Tom Hockin also appeared before same committee today and commented briefly on the Osborne report, stressing that he had not actually read the study. "The OSC thinks they are handling this the best they can, but I would side with the view that they would benefit from this separation, that they would find their work easier and that the public would be more comfortable," Hockin said, adding that this was his personal view and that he has not consulted with IFIC member firms.

The Osborne report was delivered to the OSC in March and the commission faced some criticism for delaying its release until today. Brown explained that the OSC wanted to add a couple of legal opinions to the report, and that those opinions were not delivered until last week.

Filed by Doug Watt,,