OSC got tough in 2011

The Ontario Securities Commission (OSC) has issued its annual report on enforcement activity, detailing the actions it has taken to disrupt potential illegal activity, both nationally and internationally, to protect Ontario investors from ongoing harm.

During 2011, OSC staff pursued more cases before the criminal courts and increased its use of proactive investor outreach and protective orders.

In total, OSC staff secured more than 14 years in jail sentences, compared with 195 days in 2010. So far this year, there are already five cases currently in litigation before the provincial courts.

“Maintaining a rigorous and effective enforcement regime is fundamental to the OSC’s ability to actively protect investors and promote confidence and the integrity of the markets,” said Howard Wetston, Q.C., Chair and CEO of the OSC. “During 2012 we [plan] to adapt to the increasing complexity and international scope of enforcement files while building on the success we are seeing in our actions before the courts.”

Enhanced enforcement action and investor outreach were key in 2011, with 11 interim orders and three freeze orders, which froze over $4 million, being imposed. These actions protected investors from illegal activity during an investigation, as well as the liquidation of assets.

The OSC expanded its use of communication strategies to warn investors about potential harm by adopting the use of real time social media platforms in 2011. The commission issued five Investor Alerts in 2011 directly, and added 31 companies to the Investor Warning List.

Also on the technology front, the OSC adopted proprietary trading surveillance software called OSC TradeNexus, which provides a more complete view of marketplace activity and allowed for more efficient electronic hearings.

The OSC is exploring fresh methods to reach at-risk investors, with enforcement staff developing and executing a ‘Reverse Boiler Room’ project in June that alerted 420 at-risk investors of possible illegal distributions.

On the international front, the OSC signed a memorandum with FINRA in an effort to facilitate information regarding firms and individuals operating across jurisdictions.

Currently, the OSC is acting on 32 requests for assistance from international securities regulators as a result of the agreement.

“This was an active year for our enforcement team,” said Tom Atkinson, OSC director of enforcement. “We will intensify our efforts, and work with our international regulatory partners in order to protect investors and our markets.”

Over the year, the OSC did experience challenges in collecting on monetary sanctions and cost orders, but was successful in handing out 110 cease trade orders, 83 director and officer bans, 118 exemption removals, 45 registration restrictions, as well as a total of $60,387,682 in sanctions and costs.

The regulator has posted a list of companies and individuals who are delinquent in their payments.