18 /CNW/ - Appearing at the Standing Committee on Finance and Economic
Affairs at the Ontario Legislature today, Ontario Securities Commission
(OSC) Chair David Brown discussed the recommendations of the Five Year
Review Committee, specifically addressing the need for a single securities
regulator and the question about the structure of the OSC. The Standing
Committee has been mandated to review the Five Year Review Report
recommendations and to present its final report to the Legislature by
October 18, 2004.
"I am very pleased to have
participated in consultations on the Five Year Review," said David Brown.
"It is a valuable opportunity to take a look at the laws, structure and
operational policies that characterize securities regulation in this
province. The review process provides a proactive opportunity to take a
look at a system that is working well, to determine ways in which it can
be made even better."
In particular, Mr. Brown recommended
that the Standing Committee give priority to four initiatives requiring
- The need to proclaim amendments
to the Securities Act that have been enacted that would create a regime
for statutory civil liability for secondary market disclosure, and add
express prohibitions against fraud, market manipulation and
- The need for better tools and
flexibility to deal effectively with securities regulators in other
Canadian jurisdictions, including statutory amendments to facilitate
inter-jurisdictional delegation of decision-making.
- The need to reduce the regulatory
burden and facilitate quick responses to new situations by allowing the
Commission to issue blanket rulings and orders that provide exemptive
relief to market participants.
- The need to catch up to changes
in how commercial law deals with the transfer and pledging of
securities. This is an area where Canada lags behind the U.S. and the
"Unlike investors in the United
States, Ontario investors face significant hurdles in suing corporations
and their insiders for false or misleading disclosure," Mr. Brown said.
"The proposed civil remedies will both provide investors with a means to
seek redress and encourage compliance by corporations and others with
their obligations of transparency. The prohibitions against fraud, market
manipulation and misrepresentation will enable us as regulators to seek
quasi-criminal sanctions against those who would undertake that activity
in our markets. We'll get tools we need to help protect investors in this
In its report, the Five Year Review
Committee also identified the urgent need for a single Canadian securities
regulator as the most pressing securities regulation issue in Ontario and
across Canada. This view was echoed in the report of the Wise Persons'
Committee, chaired by Michael Phelps, titled "It's Time". This report,
issued in December 2003, reflected the unanimous view of its members that
Canada must adopt a fundamentally new structure - a single regulator
administering a single securities code.
"Canada simply cannot afford the
duplication and overlap of 13 securities regulators when every country
Canadians compete with has a national regulator," concluded Mr. Brown.
"Ours is the only advanced national economy in the world not to have a
national securities regulator. We are out of step with the world."
Mr. Brown echoed the Five Year Review
Committee's support for the adoption of a Uniform Securities Act to
streamline capital markets regulation across Canada. "We have devoted
significant resources to this important harmonization project which could
form the starting point for uniform securities regulation," said Mr.
Mr. Brown also addressed the
challenge faced by the legislative committee in examining the OSC's
structure and the need to balance the advantages and disadvantages of
different models to determine if the current structure continues to be the
best to serve Ontario investors and participants in this province's
capital markets. "The OSC is always prepared to embrace change in order to
meet change," said Mr. Brown. "As a regulator of financial markets in a
period of rapid transformation, we can do no less."
Mr. Brown tabled a number of
documents with the Standing Committee, including a report on the structure
of the OSC, which the OSC commissioned from a committee headed by
Ontario's Integrity Commissioner Coulter Osborne. The report examined the
structure of the Commission and the potential for the perception of bias
and the possibility that such a perception would erode the credibility of
the Commission. While the report advises the Commission to undertake
structural changes that will require authorizing legislation, the report
found no impediment to the Commission continuing to fulfill its
adjudicative responsibilities and functions on a business-as-usual basis.
The report further pointed out that
the Supreme Court of Canada has found no complaint about the apprehension
of bias where organizations adopt an integrated regulatory model. Canada's
highest court has recognized, in the words of Chief Justice McLaughlin,
"... the overlapping of investigative, prosecutorial and adjudicative
functions in a single agency is frequently necessary for (an
administrative agency) to effectively perform its intended role."
Copies of Mr. Brown's comments and of
the documentation he tabled with the Standing Committee are available at
the OSC's web site (www.osc.gov.on.ca).
For further information: For Media
Inquiries: Wendy Dey, Director, Communications, (416) 593-8120; For
Investor Inquiries: OSC Contact Centre, (416) 593-8314, 1-877-785-1555