Home Breadcrumb caret Industry News Breadcrumb caret Industry OSC handed out 2 jail terms in 2014 The OSC is focused on bolstering its enforcement program. By Staff | March 3, 2015 | Last updated on March 3, 2015 4 min read The Ontario Securities Commission bolstered its enforcement program in 2014. As a result, the Commission: launched more quasi-criminal and criminal proceedings; enhanced its forensics capabilities; and strengthened its alliances with police services. In total, the OSC commenced 22 proceedings in 2014, which included eight cases brought before the courts. Out of those eight cases, six were commenced pursuant to section 122 of the Securities Act (Ontario), and two to the Criminal Code of Canada. In comparison, OSC commenced 27 proceedings in 2013 but only brought six cases before the courts. Read: CSA levies more than $58 million in fines for 2014 In a breakdown, the OSC says it closed cases against 91 individuals and companies in 2014, compared to 170 in 2013. Out of the 2014 total, 87 respondents dealt with the Commission, while the remaining four had their cases concluded before the court—two under provincial securities legislation and two under the Criminal Code. Overall, two defendants received jail terms: one was sentenced to three years after pleading guilty to two charges contrary to the Criminal Code, while the other was sentenced to 60 days for breaching the Securities Act (Ontario), following a quasi-criminal proceeding. The number of proceedings opened and cases closed has dropped, conceded Howard Wetston, Q.C., chair and CEO of the OSC, at a press conference yesterday. But that’s because the cases the OSC is taking on are becoming increasingly complex and wider in scope, he explains. Consider, for example, that OSC handed out more than $73 million in monetary sanctions, compared to about $58 million in 2013. Read: OSC sent more to jail in 2013 Also, the Commission plans to work more closely with RCMP, and with international agencies (see last two tables below) to combat cross-border misconduct. Read: Canada offers top regulatory environment “The collaboration between OSC Staff and police, particularly in the Joint Serious Offences Team (JSOT), is producing results,” says Tom Atkinson, director of enforcement at OSC. “Since May 2013, the JSOT has investigated 22 matters [and] brought five cases before the courts on criminal matters, as well as another nine on quasi-criminal proceedings.” Going forward, says Wetston, the OSC will work more closely with the RCMP’s Integrated Market Enforcement Team (IMET) in Ontario—these teams are funded by the government and help prosecute those using capital markets to harm investors. They were launched by the RCMP in 2003 to investigate major fraud cases, and there are teams in Toronto, Montreal, Vancouver and Calgary. Effective April 1, 2015, Ontario’s 28-member IMET (the largest of the teams) will move into the same building as OSC and JSOT. Each party will remain as separate governing bodies, but they’ll collaborate when deciding whether to handle cases via OSC tribunals or the courts. Read: 10 reasons Canada needs a single regulator New enforcement tools The OSC approved the first two no-contest settlement agreements in 2014. Those involved a total of four corporate respondents and, in one settlement, the respondent agreed to pay $8 million to advance the Commission’s mandate. In the second, three respondents agreed to pay compensation of more than $13.5 million to clients. Read: Should you take a no-contest settlement? OSC to approve no-contest settlement with TD Bank The OSC also recently proposed a new whistleblower program to encourage the reporting of serious misconduct. Under the program, a whistleblower could be awarded a financial incentive of up to $1.5 million upon the final resolution of an administrative enforcement matter. The whistleblower proposal was published in Staff Consultation Paper 15-401, and the public can submit comments on the paper until May 4, 2015. Read: Canadians file U.S. whistleblower claims The OSC also has an enhanced in-house digital forensics lab. During investigations, both the JSOT and the Enforcement Branch have been able to search and seize more digital evidence found on traditional media, such as computer hard drives, optical disks and USB thumb drives. They’ve also been able to analyze data found on mobile devices. 2014 enforcement data Total Proceedings Commenced Category Number of cases 2014 Number of cases 2013 Illegal Distributions 7 6 Misconduct by Registrants 5 2 Disclosure Violations N/A N/A Insider Trading 1 2 Market Manipulation N/A 1 Fraud 8 9 Miscellaneous 1 7 Total 22 27 – How Proceedings Were Commenced Category 2014 2013 Before the Tribunal 14 21 Court Proceedings (Quasi-Criminal*) 6 4 Court Proceedings (Criminal**) 2 2 Total 22 27 * Proceeding commenced pursuant to s. 122 of the Securities Act (Ontario) ** Proceeding commenced pursuant to the Criminal Code. – Proceedings Commenced – Respondents Category Individuals 2014 Companies 2014 Individuals 2013 Companies 2013 Illegal Distributions 7 2 9 40 Misconduct by Registrants 5 8 3 3 Disclosure Violations N/A N/A N/A N/A Insider Trading 1 N/A 2 N/A Market Manipulation N/A N/A 1 N/A Fraud 12 8 18 9 Miscellaneous 1 1 6 5 Total Respondents 26 19 39 57 – Concluded Proceedings – Respondents Category Individuals 2014 Companies 2014 Individuals 2013 Companies 2013 Illegal Distribution 18 10 30 59 Misconduct by Registrants 6 11 3 5 Disclosure Violations 1 N/A 1 N/A Insider Trading 3 N/A 2 N/A Market Manipulation N/A N/A 1 N/A Fraud 16 17 35 26 Miscellaneous 4 5 5 3 Total 48 43 77 93 – How Matters were Concluded – Respondents Category 2014 2013 Hearing before the Tribunal 58 71 Settlement Agreement 29 95 Court Proceedings (Quasi-Criminal*) 2 4 Court Proceedings (Criminal**) 2 N/A Total Respondents 91 170 * Concluded pursuant to s. 122 of the Securities Act (Ontario) ** Concluded pursuant to the Criminal Code – Cases ongoing before the courts, as at December 31 2014 2013 Courts (Quasi-Criminal) 10 7 Courts (Criminal) 2 2 – Protective Sanctions 2014 2013 Cease Trade Orders 67 159 Director and Officer Bans 37 67 Exemption Removals 67 118 Registration Restrictions 39 81 Total 210 425 – Monetary Sanctions OSC Total 2014 Total 2013 Administrative Penalties/Settlements $19,498,461 $14,741,854 Disgorgement $49,081,332 $40,242,705 Costs $4,867,150 $3,176,936 OSC Total $73,446,943 $58,161,495 Courts (Quasi-Criminal Proceedings) Fines $5,000 N/A Restitution N/A $155,000 Total $5,000 $155,000 Courts (Criminal Proceedings) Restitution $4,841,806 N/A Total $4,841,806 N/A – International Efforts Jurisdiction Requests for assistance received by OSC in 2014 Requests for assistance received by OSC in 2013 International 18 17 United States 39 37 Domestic 22 14 Total 79 68 Jurisdiction Requests for assistance made by OSC in 2014 Requests for assistance made by OSC in 2013 International 10 19 United States 17 20 Domestic 7 7 Total 34 46 Staff The staff of Advisor.ca have been covering news for financial advisors since 1998. 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