MADHAVI ACHARYA-TOM YEW
The provincial government is forging ahead
with joint efforts to create a national stock market regulator, as well
as legislation that will make it easier for investors to sue companies.
Having a single securities watchdog —
rather than the current patchwork of 13 separate provincial and
territorial agencies — would "inspire confidence" in Canada's securities
industry, said Gerry Phillips, the minister responsible for the industry.
RENE JOHNSTON/TORONTO STAR
David Brown, head of the Ontario
Securities Commission, delivers the keynote speech yesterday at its
annual industry conference.
|"We are going to be
persistent," Phillips told an industry conference held by the Ontario
Securities Commission yesterday. "My experience is that if an idea is
important and it's right, what you have to do is stick at it and
eventually you will make it happen."
Ontario has long pushed for a single
regulator, while British Columbia, Alberta and Quebec are among those that
oppose the idea, fearing a centralized system that favours big companies
and ignores regional needs.
Phillips, who is chairman of Management Board of Cabinet, made the
comments during the annual conference held by the OSC at the Metro Toronto
He said the provincial government also plans to table legislation that
will allow investors to bring lawsuits against companies and corporate
insiders that issue false and misleading statements in press releases and
At the moment, investors can only sue for misrepresentations made when a
prospectus for the sale of shares is issued.
The government will also launch a review of the Investment Dealers
Association and the Mutual Fund Dealers Association of Canada to determine
whether the self-regulating trade organizations should continue to play
the primary role in reviewing investor complaints and disciplining
The proposals are among 14 recommendations delivered in a report in
mid-October by the Standing Committee on Finance and Economic Affairs.
Other recommendations still need further review, Phillips said. Among
them: finding a way to secure restitution for investors who have been
duped by rogue investment advisers, and separating the OSC's enforcement
and disciplinary functions. Currently, the commission is prosecuting and
meting out judgment in cases of wrongdoing.
While there has been no evidence of bias in OSC proceedings, there is a
growing public perception that it is inappropriate for the commission to
wear both hats.
Doug Hyndman, chair of the British Columbia Securities Commission,
expressed concern at the prospect of splitting the OSC.
Because OSC commissioners are involved in policy issues, they bring
"expertise and experience" to bear in disciplinary hearings that would be
lost should the agency be split in two, he said.
"I think the people calling for this might end up regretting it," he told
OSC chair David Brown, who has supported the Ontario government
recommendations, echoed those concerns.
"I want to make sure those strengths are not lost, or that they are at
least replaced with something that is equivalent," he said.
The current OSC probe into the country's mutual funds industry was also a
hot topic at the day-long conference, which attracts Bay Street
executives, as well as academics and investor advocates.
Brown declined to comment on the progress of talks between the commission
and four mutual fund firms, now trying to hammer out an agreement to
settle allegations of improper market timing.
The commission is considering implementing a mandatory short-term trading
fee to deter this practice, which involves rapid in-and-out trading in
mutual funds to capitalize on time zone differences.
Leslie Byberg, manager of the Ontario Securities Commission's investment
funds branch stressed that the proposal is preliminary.