The Ontario Securities Commission is seeking comment on its priorities for the coming year, which include a beefing up of its enforcement abilities, as well as greater efforts to protect retail investors.

“We are focused on conducting effective compliance programs, delivering vigilant enforcement and strengthening investor protection, as well as providing greater organizational accountability,” says OSC chairman David Wilson, in the statement. “The OSC will maintain a proactive approach to prevent, detect and deter harm to investors and the overall markets. Moreover, we will work to strengthen the securities regulatory system within Canada’s framework of provincial and territorial securities regulators.”

It notes that the commission has identified four strategic goals to achieve over the next five fiscal years. They are: identify the important issues and deal with them in a timely way; deliver fair, vigorous and timely enforcement and compliance programs; champion investor protection, especially for retail investors; and, support and promote a more flexible, efficient and accountable organization.

Among its priorities are initiatives that have already been announced, such as: modernizing registration requirements; improving disclosure of executive compensation; and, modernizing prospectus requirements.

Other initiatives include: addressing investor protection concerns arising from the sale and distribution of principal protected notes; developing the appropriate regulatory response to market developments in the area of non-conventional investment funds and structured products

It also plans to beef up enforcement by: adding enforcement and compliance resources; identifying gaps in the enforcement framework; reducing timelines for completing investigations and bringing regulatory proceedings forward; fostering inter-jurisdictional co-operation to improve the coordination of investigative efforts, enforcement, and legal tools for enforcement; and, increasing transparency of enforcement actions.

Specifically, it pledges to: articulate and promote a coherent statement of enforcement and compliance priorities; improve the internal processes for referring cases to enforcement under a risk-based approach to regulation; increase the number of enforcement proceedings commenced within four months of the date of transfer to litigation, where there have not been settlement discussions; setting up a special anti-scam unit; improving the electronic processing and storage of documentary evidence; increasing the efficiency of the continuous disclosure review program for corporate issuers by continuing to implement an industry-specialization approach; increasing utilization of coordinated inter-branch compliance field reviews of investment fund market participants; support efforts of the justice ministers to develop recommendations to improve the enforcement regime; and, work with the International Organization of Securities Commissions and other international bodies to enhance global co-operation in enforcement matters.

For retail investors, it is promising: point-of-sale disclosure for mutual funds and segregated funds; to improve its understanding of investor expectations of the complaint-handling process, and to seek more effective means for the resolution of complaints and restitution; to enhance the effectiveness of the Financial Services OmbudsNetwork; co-hosting a 2007 Investor Town Hall; to seek retail investor perspectives on key issues; to broaden the implementation of reviews of investment fund prospectuses and continuous/integrated disclosure to assess sufficiency of disclosure and identify emerging issues, including trends in fees; and, to explore opportunities for enabling investors to use financial information through eXtensible Business Reporting Language.

To improve accountability, it plans to: develop more expertise in the conduct of cost-benefit analyses; identify opportunities for improving service; update the OSC’s IT strategic plan; work with other provincial and territorial securities regulators to develop an IT strategic plan for the Canadian Securities Administrators; implement improved internal knowledge-management initiatives across the OSC; continue to develop an OSC human resources strategic plan; and, review and strengthen the OSC’s standards of ethics, integrity and accountability, consistent with the Government of Ontario’s planned implementation of the new Public Service of Ontario Act, 2006.

As for its finances, the OSC reports that stronger than anticipated market growth in 2006/07 resulted in actual revenue that was $10.5 million higher than originally forecasted. Delays in hiring led to $1.3 million of underspending on salaries, which also contributed to a surplus.

The budget for 2007/08 anticipates a deficit, “in order to reduce our surplus and return the surplus to market participants by way of fees that are lower than would otherwise be the case”. Salaries and benefits make up 73% of the OSC’s budget. In the year ahead, it is expecting expenses to grow by 19.6% (to $82.4 million from $68.9 million) due to the addition of staff, primarily in enforcement, along with enforcement-related services.

@page_break@With revenue only expected to increase 6.6% to $75.2 million, the commission is expecting to go from a $1.6 million surplus to a $7.2 million deficit.

Written submissions on the priorities are due by June 11.