Canadian securities regulators are focused on beefing up enforcement by handing out harsher sanctions and by bringing more cases to the criminal courts.

During a panel discussion at the Investment Funds Institute of Canada’s annual conference in Toronto, regulators from across the country said improving enforcement is a key priority.

“Clearly there’s a demand from the public, and the investing public in particular, for harsher sentences, more visible sanctions for fraudulent conduct in our market,” said Bill Rice, chairman of the Alberta Securities Commission and chairman of the Canadian Securities Administrators.

He said the ASC is attempting to take more “matters of significance” to the courts, and is seeking more jail terms for those who engage in fraud. However, he said the process of bringing matters before the courts can be slow and challenging, involving higher burdens of proof and frequent delays and disappointments.

“We’re not seeing the level of support at the criminal prosecution level that we as securities regulators would like to see,” he added, “and feel that we’re going to have to take on some of that responsibility ourselves.”

Other provincial regulators said they’re also pursuing harsher sentences in the realm of enforcement.

The British Columbia Securities Commission is focused on cracking down on misconduct in the exempt market in particular, according to Paul Bourque, executive director of the BCSC.

“We are trying to target in the exempt market the particularly egregious conduct that we see from time to time,” he said. “While that conduct is a very small part of the market…it is nevertheless catastrophic to the investors who lose money in these investments.”

Since 2007, Bourque said, the BCSC has charged 17 individuals with 47 criminal code charges and 211 Securities Act charges, and has obtained nine convictions, with sanctions that include fines and jail sentences of up to two years.

“We’re very focused on trying to send a message there that there is a significant deterrent to misconduct,” he said.

The Autorité des marchés financiers in Quebec is also intent on improving enforcement, according to Mario Albert, chairman of the AMF. He said the regulator has tripled the number of its staff dedicated to enforcement, and is focusing in particular on insider trading, complexity of financial products and fraud occurring over the Internet.

The Ontario Securities Commission, meanwhile, is largely focusing its enforcement efforts in the areas of illegal distribution of securities and fraudulent boiler room operations, said Mary Condon, vice chairwoman of the OSC.

Regulators pursue stage three of point of sale initiative

When asked about the ongoing mutual funds disclosure reform process, Rice said that regulators continue to be committed to implementing rules that will require the new ‘Fund Facts’ plain language disclosure documents to be delivered at the point of sale.

“There’s a lot of work still to be done to have that achieved,” he said. Nonetheless, he added, “There is a commitment to continue through to the last stage.”

While the mutual fund industry generally supports the new disclosure documents, it has voiced a range of range of concerns with the point of sale delivery requirement.

Rice said regulators recognize the industry’s concerns, including the fact that other investment products don’t face the same disclosure requirements, which potentially puts funds at an unfair disadvantage.

To address this concern, he said regulators will consider applying similar disclosure rules to other products.

“There is an understanding that final decisions should contemplate competitive consequences and the application of similar rules to other similar products,” he said.

He expects it will be a challenge to come to a conclusion that’s considered fair and evenhanded among all stakeholders.

“The interest of protecting investors is conflicting with business practices,” he said.