Investors Scrutinizing the Regulators

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Fox Guarding the Hen House



Restructuring the Ontario Securities Commission


The Osborne Committee

Hon. Coulter A. Osborne Q.C.

Ontario Integrity


David Mullan

Law Professor (ret'd)

Toronto Integrity Commissioner

Brian Finlay Q.C.

Partner, WeirFoulds LLP


The Ontario Securities Commission should divide its adjudicative and enforcement roles by establishing a separate tribunal to hear securities cases. This is the conclusion of an independent committee headed by Ontario's Integrity Commissioner Coulter Osborne, Q.C.

Ontario Securities Commission (OSC) Chair David Brown publicly released the report of the "Osborne Committee" on August 18, 2004 when he appeared before the Ontario legislature's Standing Committee on Finance and Economic Affairs, which is currently conducting public hearings on the Five Year Review Committee Final Report: Reviewing the Securities Act (Ontario). He also released two recent legal opinions, written by John B. Laskin of Torys LLP and Gary B. Girvan of McCarthy Tétrault LLP, which support the legality and propriety of the OSC's current structure.

In February 2003, OSC Chair David Brown asked The Honourable Coulter Osborne, retired law professor David Mullan and lawyer Bryan Finlay, Q.C. to review and provide advice on the OSC's existing structure and, in particular, its adjudicative function in light of the increased sanctioning powers that Bill 198 has given the OSC. In its 104-page report, dated March 5, 2004, the Osborne Committee strongly advises the OSC to separate its adjudicative function, noting that "the arguments supported by the evidence in favour of this separation are persuasive, indeed overwhelming." In its view, "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."

Among its 23 recommendations, the Osborne Committee recommends that:


a securities adjudicative tribunal be established


it have jurisdiction over all matters in which sanctions against a respondent are sought


it should not have general jurisdiction over matters such as poison pills, takeover bids and exemption orders


accommodation for the tribunal, including hearing rooms, offices and meeting rooms, should be separate from the OSC to avoid any lingering perception that the OSC and the tribunal are in substance one entity


appointments to the tribunal should be made by the Lieutenant Governor in Council, through the Minister of Finance on the recommendation of a committee no larger than five persons


the tribunal should consist of no more than 12 persons


apart from the Chair and Vice-Chair, appointments should be part-time per diem appointments


remuneration should be about $1,500 a day


there should be an appeal as of right to the Divisional Court and then, with leave, to the Court of Appeal


 the tribunal should have its own budget and the OSC should provide at least some of the funding.

The Torys legal opinion states that the apprehension of bias to which the Osborne Committee makes reference in its report does not affect the ability of the OSC to lawfully exercise its adjudicative powers conferred by the Securities Act. The McCarthy Tétrault opinion concludes that the OSC's internal structures do not in any way conflict with the responsibilities of the OSC's board of directors regarding enforcement.

The OSC has been criticized for keeping the Osborne report secret for months. Mr. Brown informed the Standing Committee that the decision to seek the two legal opinions contributed to the delay in releasing the report.

Mr. Brown's presentation focused on the recommendations of the Five Year Review Committee that fall within the four priority areas for legislative reform that he has identified.

The OSC's Executive Summary does not refer to reform of the OSC's structure.


Ontario Panel to Advance Design of a  Single Regulator

18 February 2005


OSC needs tough scrutiny

01 September 2004

Consumers assail the system

01 September 2004

OSC should not hold disciplinary hearings

01 September 2004

The OSC swamp

28 August 2004

OSC struggles under load

28 August 2004

Separating the judge from the prosecutor

23 August 2004

OSC doesn't operate in political vacuum

20 August 2004

OSC urged to create separate tribunal for securities offences

19 August 2004

OSC needs reform to preserve 'integrity'

19 August 2004

Osborne report says OSC should split off adjudicative function

18 August 2004

Report favours independent securities tribunal

18 August 2004


OSC Web Site

November 25, 2004

Report by the Committee Chaired by Coulter Osborne in pdf


After a great deal of pressure from investors and the Fairness Committee members themselves, the OSC finally caved-in (many months later) and reproduced the 32MB Report in a format that was acceptable (262kb) for public disclosure.


Thank you all for holding the OSC's feet to the fire. - R. Kyle


I will maintain my original posting below as some of you may find it still more user-friendly with a table of contents and bookmarks.


The Osborne Report

18 August 2004



Hearings set that could lead to securities system reform

03 August 2004

The OSC and independence

April 2004

Another year, another kick at securities regulation

January 2004

Restructuring the OSC

November 2003

Report urges review of OSC structure

May 2003

Ex-OSC heads push to separate regulator's tribunal

01 February 2003

Colossal bungling at the OSC 

04 November 2002


See also:


Letter to the Standing Committee on Finance and Economic Affairs


22 July 2004


Mr. Trevor Day, Committee Clerk

Standing Committee on Finance and Economics

Queen's Park

Toronto, Ontario


By E-Mail:



Dear Mr. Day,


Further to our conversation yesterday, and at the direction of Ms. Deller, Deputy Clerk and Executive Director of Legislative Services, I would like to re-iterate my concerns with respect to the public participation at meetings of the Standing Committee of Finance and Economic Affairs (“Committee”).


The Terms of Reference pertaining to the review by Committee consist of three significant issues, which interested parties have the opportunity to speak to:


  • the priority recommendations as set out in the Five-Year Review Committee Final Report:  Reviewing the Securities Act (Ontario) a.k.a. ‘The Crawford Report’


  • securities regulation in Canada and a single regulator system; and


  • the appropriate structure for the adjudicative tribunal role of the Ontario Securities Commission (OSC)


These are topics of great concern to the investing public, as reflected in extensive media coverage and public submissions to the OSC and government committees. As the largest securities regulator in Canada, the OSC’s strengths and weaknesses are felt nationally and thereby draw greater attention.


Last summer Mr. David Brown, Chair of the OSC, created a committee consisting of Mr. Bryan Finlay, a partner with Weir Foulds; Mr. David Mullan, a professor in Queens University’s faculty of law; and its chairman, Mr. Coulter Osborne, a former appeal court associate chief justice who currently serves as Ontario’s Integrity Commissioner, to report on the adjudicative tribunal role of the OSC.  I will refer to this report as the Osborne Report.


This very knowledgeable and respected committee completed the report prior to April of this year.  We are now on the cusp of August and there has been no release of the report by the OSC, an agency of the government. The OSC, through their legal counsel, Ms. Donna Martin-Sidey, advised March 16, 2004 that the OSC would not be releasing the Osborne Report.  Instead, it would be tabled to the legislative committee which was struck to review the Crawford Report and that this Committee would decide whether to make the Osborne Report public or not. 


The Government of Ontario has publicly committed to transparency and disclosure. The immediate release of this report would demonstrate that commitment.


I am very concerned that an agency whose mandate is to administer and enforce securities laws would choose not to share with investors the recommendations of thoughtful experts on the subject of OSC adjudication and conflicts of interest.  Release of the Osborne report would facilitate further thoughtful discussion at the Ontario Standing Committee on Finance and Economic Affairs and implementation of necessary reforms.


The Osborne Report should be released immediately. 


As the Committee has been scheduled to meet for four days in August, and the Report’s contents are a subject of that meeting, it does not make sense to expect the public to comment on a paper which is not before them or maybe placed before them at those meetings.


The investing public deserves better disclosure.


Will the Committee release the Osborne Report immediately in order that presenters have the opportunity to prepare to comment on this Report that was almost eight months in the making by such a knowledgeable committee?


Secondly, since the timelines for presenters has not yet been established, I suggest that any time limitation on any presenter should not be less than twenty minutes.  The three robust and critical issues tabled, which affect all Ontarians and Canadians, cannot be properly addressed if only permitted three minutes per issue, should a ten minute limit be established.


Lastly, if the Sub-Committee were to dedicate the entire first day of the meetings to government experts, Ministry of Finance officials and the OSC, will they be limited to the same time constraints as the interested parties? 


After all, the opportunity for the public to participate at this level only emerges every five years.


I look forward to your response.



Kind regards,


Robert Kyle

Investor Advocate

Toronto, Ontario



c.       Pat Hoy, Chair, Standing Committee of Finance and Economics and Sub -Committee

c.       John Milloy, Member, Standing Committee of Finance and Economics and Sub-Committee

c.       John O’Toole, Member, Standing Committee of Finance and Economics and Sub-Committee

c.       Michael Prue, Member, Standing Committee of Finance and Economics and Sub-Committee

Standing Committee Response to Letter