scales-regulation-legal

The Alberta Securities Commission has amended the Securities Act (Alberta) to harmonize cross-Canada regulatory enforcement.

Read: 10 reasons Canada needs a single regulator

Effective July 1, 2015, a new section requires that most settlement agreements made by other securities regulators across Canada are automatically put into effect in Alberta as well.

So, when another Canadian securities regulator issues an order or enters into an agreement that imposes sanctions, conditions, restrictions or requirements on a person or company, that order will automatically apply in Alberta.

Reciprocation will occur, warns ASC, without notice to the person or company that will be affected, and without a hearing in Alberta. As such, the order will have effect as if it were made by ASC.

However, monetary fines won’t be reciprocated, Mark Dickey, senior communications advisor with the ASC, tells Advisor.ca. “That’s always been the case with reciprocal orders, even when the former system was in place.”

Read: Regulatory daisy chain threatens advisors

Any amendments made to sanctions that ASC reciprocates, he adds, “would be a reflection of slight differences in rules across jurisdictions.” Finally, if the original order or agreement is varied, amended or revoked, that change will also apply in Alberta.

Also under the new provisions, orders or agreements made by international regulators (such as the Securities and Exchanges Commission) may be reciprocated in Alberta by an order of ASC.

Registering in Alberta

Going forward, if someone tries to register in Alberta but has been banned or sanctioned elsewhere, that previous order “would be something that would be taken into account. When they try to register, it will be as if orders were already here, which they now will be automatically and immediately,” says Dickey.

So, being sanctioned outside of Alberta may affect people’s ability to register in the province. However, says Dickey, ASC already did reviews of people’s registration histories.

When asked whether the new amendment is related to the push for a national regulator, Dickey says ASC’s focus is on harmonization of enforcement, not on harmonization of national rules. “We’re the first jurisdiction to do this in Canada. [But] we have a national system; just not a national regulator.”

Alberta’s government is not part of the Cooperative Capital Markets Regulatory System, a joint provincial initiative that’s viewed as a step toward a national regulator.

More details

ASC’s release specifies that the term “securities regulatory authority in Canada” refers to, “A securities commission, or another person or body, empowered by law to regulate trading in securities or derivatives in, or to administer or enforce the securities laws of, any province or territory of Canada, or any other person or body prescribed by regulation. But [the term] does not include a self-regulatory organization, exchange, clearing agency, quotation and trade reporting system, auditor oversight body or credit rating organization.”

The release says ASC may reciprocate orders made in Canada, with or without giving a person or company the opportunity to be heard, if:

“the person or company has been convicted in Canada or elsewhere of an offence […] arising from a transaction, business or course of conduct related to securities or derivatives, or under laws respecting trading in securities or derivatives, [or if they have] been found by a court in Canada or elsewhere to have contravened laws respecting trading in securities or derivatives.”

ASC adds that sanctions may also be reciprocated if an individual or company is subject to an order made by:

(i) a securities regulatory authority outside Canada;

(ii) a recognized self-regulatory organization in Canada; or

(iii) an exchange in Canada, imposing sanctions, conditions, restrictions or requirements on the person or company.

But, in those last three cases, reciprocation wouldn’t be automatic.

ASC’s release also says the term “securities regulatory authority outside of Canada” refers to, “A securities commission, a self-regulatory organization, an exchange or another person or body, empowered by law to regulate trading in securities or derivatives in, or to administer or enforce the securities laws of, any jurisdiction outside of Canada.

Overall, “this provision will take a good system of inter-jurisdictional reciprocation of enforcement decisions, and make it even faster,” says Bill Rice, chair and CEO of ASC.

Dickey agrees, saying, “this rule change will make the Canadian regulatory system more effective. There’s no delay, and this is a harmonization of Alberta’s orders with what’s going on in the rest of Canada.”

In other news

The ASC has also published a list of individuals and companies that have unpaid administrative penalties, disgorgement orders and costs that were imposed as a result of enforcement proceedings in Alberta. 

“Holding respondents accountable for their misconduct is important for investor protection and for protecting the integrity of the Alberta capital market,” says Bill Rice, chair and CEO of ASC.  “Enforcing Commission orders, including collecting outstanding amounts owed, is key to effective deterrence.”

The unpaid orders list will be updated quarterly.

Also read:

How to build an effective compliance system

How to deal with client complaints

Editorial: Fix these 3 systemic problems

Industry lacks risk assessment standards: OSC panel

Originally published on Advisor.ca

Add a comment

You must be logged in to comment.

Register on Advisor.ca