to recommend split OSC functions
Compelling argument against separating prosecutor and adjudicator roles
yet to be made, minister says
Monday, November 1, 2004
By James Langton
Unless he's presented with a novel argument to the contrary, Gerry
Phillips, chairman of the Management Board of Cabinet, is expected to call
for the Ontario Securities Commission's adjudicative function to be hived
off in a separate body.
Talking to reporters following his address at the Dialogue with the OSC in
Toronto Monday, Phillips suggested that the government would come forward
with a recommendation to split the OSC's dual functions, as was
recommended by a legislative committee in October, and the
committee report earlier this year.
Phillips said that he hasn't yet heard a compelling argument against the
recommendation to split the commission's two functions, the prosecutorial
and the adjudicative. He pointed out that there are arguments on both
sides, and that the issue is only public perception of bias, not actual
bias. Yet, he suggested that the government will follow the standing
committee's recommendation on this issue. Further consultation will take
place, but Phillips said he hasn't yet heard an argument against the idea
that would defeat the pressure to divide the commission.
The other possible caveat is if the work toward a single, national
regulator makes substantial progress. While the standing committee
recommended that a split commission structure should ideally be introduced
with a single regulator, that decision obviously wouldn't be solely up the
Phillips remains committed to the idea of working toward a single
regulator. He said that he will continue to try to advance discussions
with the other provincial jurisdictions to make the idea seem less
Ontario-centric. At the same time, it will also be seeking to put more
flesh on the bones of the proposal he made in June.
Overall, Phillips said that the government is "comfortable" with all of
the legislative committee's recommendations. The government doesn't yet
have formal responses to most of the committee's recommendations. In the
coming months, it will be issuing a response to them. Phillips singled out
committee recommendations such as: striking a task force to review the
function of self-regulatory organizations, fund governance and a better
mechanism for delivering investor restitution, as ones that are likely to
get government attention.
In line with his response to the standing committee report, the only
recommendation it has officially pledged to adopt is to introduce
legislation to enshrine civil liability for secondary market disclosure.
On Monday, Phillips said the government will soon be introducing such
On the issue of fund governance, OSC chair David Brown said in his opening
remarks that it's reasonable to expect that tougher fund governance rules
will be proposed in the spring. However, Brown noted that discussions on
the issue are still underway with the other members of the Canadian