Wednesday, January 12, 2005
By James Langton
The Ontario Securities Commission has dropped its court challenge and
finally released its critical audit of the Investment Dealers Association
of Canada, which was carried out in 2000.
The provincial Information and Privacy Commissioner ordered the report
released last summer, in response to a request from an unnamed investor.
The OSC initially resisted that order and took the matter to court for a
review of the privacy commission's decision.
The OSC has now gone ahead and released the document. It is posted on
investor advocate Rob Kyle's website at:
OSC manager media relations, Eric Pelletier,
says that it decided to drop the judicial review because of the, “passage
of time and the resources required to continue with this file.”
With the report remaining private for so long, the conclusions of the
audit from the year 2000 are largely old news. The IDA has already dealt
with many of the audit’s withering conclusions by bringing in
Robert Chambers of Asset Risk Advisory Inc. to help make some significant
changes. His report became known as the
Notably, the IDA hired Paul Bourque as senior vice president member
regulation. Bourque has overhauled the enforcement IDA department, which
received some heavy criticism in the audit.
Bourque says that the IDA has implemented changes in all of the areas
criticized in the audit, and it adopted all 48 of the recommendations that
it received from the Chambers report.
“We have implemented significant changes to our policies and procedures in
every area, and we are certainly prepared to be judged on our track record
to date and on our current results,” Bourque says.
Nevertheless, the audit report’s findings are still disturbing. Among
a growing backlog of enforcement cases;
no screening process for complaints and a bloated case review process; and
a “significant number of changes to penalty recommendations” by the former
SVP member regulation.
The report called for an emergency resource allocation to help clear up
the backlog and an overhaul of the department's other processes.
The audit also suggests that the IDA did not have “sufficient resources
allocated to its member regulation to ensure that it meets its obligations
as an SRO”
The extent of the problems the OSC found during the audit was one of the
key reasons it sought to keep the report private. The OSC suggested that
releasing the report could harm its ability to carry out future audits
with full candor, and it indicated that it was uncomfortable releasing a
document that was written with the expectation that it would remain
However, other securities commissions have routinely released their own
audit reports to the public.
Meanwhile, the OSC indicated at an industry conference last fall that it
may start doing so too, although the reports will be written with the
understanding that the will ultimately be publicly disclosed. IE