The Ontario Securities Commission has published guidelines that staff use when deciding if it is appropriate to disclose an ongoing investigation.

“These guidelines confirm our current practices that are designed to protect investors and promote confidence in our capital markets,” said Michael Watson, director of enforcement. “In publishing these guidelines, we are enhancing transparency in our processes.”

“Investors and our markets are best served when correct material information is available to all stakeholders on a timely basis. These guidelines outline the circumstances in which we feel that the value in disclosing an investigation outweighs any risk associated with the disclosure,” added Watson.

The guidelines have been reviewed by the Commission and OSC advisory groups.

The guidelines note that in most circumstances, there will be no public disclosure by OSC staff of an ongoing or closed investigation to avoid prejudicing an investigation, prejudicing individuals under investigation, or where confidentiality restrictions of the Securities Act apply.

However, in certain circumstances, OSC staff may notify a market participant that the existence and nature of an investigation ought to be disclosed. Except in exceptional circumstances, it is anticipated that the relevant parties will be given an opportunity to make an announcement about an investigation before OSC staff take any steps to disclose the investigation.

The circumstances in which an investigation may be disclosed include:

  • the need to protect investors from fraudulent behaviour such as an on-going scam;
  • where related investigations by criminal law authorities or other regulators are disclosed;when confidence in the capital markets could be harmed by a failure to confirm that a matter is under regulatory consideration; and
  • to confirm a disclosure by a market participant that they are under investigation or to correct any misleading information or denial of the existence of an investigation by that market participant.

The guidelines also provide for notification of market participants and other relevant stakeholders of the completion of an investigation that had been publicly disclosed if no proceedings are to be taken.