By KAREN HOWLETT
Monday, Nov 1, 2004
|Ontario Management Board
Secretariat chairman Gerry Phillips told a conference in Toronto that
he wants the OSC's roles split within the next 12 months.
The Ontario government plans to radically overhaul the province's
securities regulator within a year by splitting its dual roles as both
prosecutor and adjudicator.
Ontario Management Board chairman Gerry Phillips said Monday that the
government endorses all 14 recommendations made in a legislative
committee's report calling for sweeping changes to the regulatory system,
including the creation of a separate hearing tribunal. He said he plans to
recommend that the process of separating the Ontario Securities
Commission's two roles begin within the next 12 months. “I have not seen a
strong argument against it,” he told reporters following his remarks at an
OSC conference, where he delivered the keynote address.
The report, prepared by the standing committee on finance and economic
affairs and tabled in the Ontario Legislature last month, calls for the
creation of a single regulator that would replace the existing patchwork
of 13 provincial and territorial bodies. Failing substantial progress on
that front over the next year, the provincial government should take steps
to separate the regulator's potentially conflicting dual roles, the report
Mr. Phillips said the issue will be addressed in a way that does not
compromise the OSC's effectiveness. “This government continues to have
every confidence in the OSC and that its internal procedures are effective
in precluding bias.”
OSC chairman David Brown supported the move, although cautiously. “Part of
me is quite supportive of this, but another part of me worries there is
still quite a bit of thinking that needs to be done,” he told a panel
discussion on the topic.
The OSC prosecutes securities violators in Ontario and presides over
disciplinary hearings, acting in both a policing and judicial role.
Momentum has been building to restructure the OSC since last year when a
high-powered group of former commission chairmen began pushing to separate
Mr. Brown acknowledged Monday that the process began when securities
lawyers Edward Waitzer, Stanley Beck and James Baillie met with him to
discuss the OSC's structure and whether the time had come to spin off the
tribunal function from the rest of the agency.
That same year, a committee headed by corporate lawyer Purdy Crawford said
the OSC's structure can give rise to “perceptions of potential for
conflict or abuse.”
In response to that committee, the OSC appointed a three-man committee
headed by Coulter
Osborne, the province's Integrity Commissioner. The
Osborne committee said in a report this year that the government should
create a separate tribunal to examine cases involving securities
Mr. Osborne, who was on the same panel as Mr. Brown Monday, explained why
his committee felt the status quo was no longer good enough.
“We decided there should be no change unless there was clear and
convincing evidence in support of that change,” he said. “The decibel
level of complaints about the current structure of the OSC increased
during our work.”
However, one of the panel members, British Columbia Securities Commission
chairman Douglas Hyndman, said he vigorously opposes the creation of a
He said he places a high value on the expertise of commissioners, who sit
on hearing tribunals as well as set policy. There is real value in having
commissioners involved in creating policy also sit on tribunals, Mr.
Hyndman said. It's essential to have tribunal members who have an
understanding of the regulatory structure, who can assess the significance
of evidence and misconduct, he said.
Mr. Phillips told reporters that, in his view, the naysayers have not made
a compelling case for maintaining the status quo. “I have not seen a
strong argument against” setting up a separate tribunal.
Mr. Phillips also said Monday that he plans to re-introduce legislation
within a matter of weeks that will make it easier for aggrieved investors
to recoup their losses in court.
The legislation will allow investors to sue executives and directors of
publicly traded companies for misrepresentations or failing to make timely
disclosure. The legislation was to be proclaimed into law last year as
part of a package of reforms aimed at strengthening the province's
securities laws. But the civil liability provision was delayed after
several companies lobbied against it.
Ontario's Mr. Phillips also vowed to continue pushing for the creation of
a single regulator — a move supported by the federal government but
rejected by every other province.
“Our number one securities priority is to find a way in this country to
build a common securities regulator for Canada,” he said.