Tuesday, November 02, 2004
The Ontario government will overhaul the structure of the Ontario
Securities Commission to separate its adjudicative role, unless
significant progress is made toward a single national securities
regulator, the commission's government overseer said yesterday.
Gerry Phillips, the Ontario minister responsible for securities
regulation, said the province will hold consultations on the topic and, if
a single regulator is not within reach a year from now, he will recommend
"I have not seen a strong argument against it," Mr. Phillips said
following a speech during a day-long conference hosted by the OSC in
Later, he told the provincial legislature that progress is needed in the
next 12 months in starting to "look in earnest at a separate adjudicative
tribunal for the OSC."
An overhaul of the OSC would follow a recommendation by an all-party
Ontario standing committee on finance and economic affairs, which said
last month work should begin immediately on determining how such a
restructuring would proceed.
That committee also recommended that any single regulator in Canada have a
separate adjudicative function.
If there is no substantial progress toward a single commission in the next
12 months, the OSC's adjudicative role should be split off, the committee
added in its report.
The debate over the need for a single regulator in Canada has gone on for
decades. Quebec, Alberta and British Columbia are strongly opposed to the
Mr. Phillips yesterday agreed that even if a single regulator is achieved,
it should be set up so that its adjudicative powers are separated from its
enforcement and policymaking functions.
A move to split off the OSC's adjudicative role would involve the creation
of a separate tribunal which would hold disciplinary hearings brought
forward by OSC enforcement staff.
David Brown, OSC chairman, told reporters yesterday that work has
commenced on determining how such a tribunal could be created.
"What we can do is to make sure that the issues are thought through and
that there are mechanisms put in place to make sure that this is not a
step backwards," Mr. Brown.
Mr. Phillips "will be looking to us for assistance in those matters," Mr.
Brown added. "As you heard him say, he does not want to do anything that
would erode the effectiveness of securities regulation in Ontario."
Under the OSC's current structure, commission staff investigate and
prosecute complaints, while a panel of OSC commissioners adjudicates them.
The regulator --which also has policymaking authority -- is set up to
ensure the two arms act without influence over or contact with each other,
although all operate under the OSC banner.
Still, critics have raised concerns over potential bias at the commission,
which prompted the regulator to investigate.
A committee struck by the OSC to study the issue found "the nature of the
apprehension of bias has become sufficiently acute as to not only
undermine the commission's adjudicative process, but also the integrity of
the commission as a whole." While the perception of bias was a concern, no
actual bias at the OSC was uncovered.
A major concern over establishing a separate tribunal is that it will lead
to a loss of expertise gained by having commissioners hear cases and then
use that experience to shape policy.
Another difficulty being mulled over by Messrs. Brown and Phillips is
finding a sufficient number of individuals with the expertise required to
serve on a separate adjudicative tribunal.
Mr. Phillips also told the Ontario legislature yesterday he plans to move
quickly on a number of other recommendations made by the standing
committee. These include creating civil-liability provisions for
secondary-market disclosure and setting up a task force to review the role
of self-regulatory organizations.