The volume of enforcement activity the Ontario Securities Commission (OSC) launched increased in the past year, as the provincial regulator brought 31 new enforcement cases in 2015, up from 22 cases in the previous year, according to a new OSC report issued on Monday.
Specifically, the OSC reports that illegal distributions remained the top offence (eight cases), followed by fraud (seven cases) and breaches of OSC orders (six cases). Of the 31 new cases in 2015, 18 of them were brought before the OSC’s tribunal, up from 14 in the previous year; there were also 10 quasi-criminal cases and three criminal cases.
Although there more cases were brought in 2015, fewer regulatory proceedings were concluded during the year, the OSC reports, with a total of 84 cases wrapped up in 2015, down from 91 in 2014. The number of cases that were settled rose from the previous year (to 38 in 2015 from 29 in 2014), as did the number of court cases (nine in 2015 from four in 2014). However, the number of contested hearings that were concluded dropped to 38 cases last year from 58 in 2014.
In addition, the OSC reports that the total value of monetary penalties imposed during 2015 declined a bit to $67 million from $73.4 million in 2014. The total value of administrative penalties and settlements assessed during the year increased slightly, to $20.1 million from $19.5 million, but the total amount of disgorgement ordered declined to $42.9 million from $49.1 million and the costs ordered came in at $4 million for the year, down from $4.9 million in 2014.
In court, the OSC reports that it secured more than $500,000 in fines and restitution in quasi-criminal cases, up from just $5,000 last year. However, the restitution ordered in criminal cases dropped to a little more than $100,000 in 2015 from $4.8 million in 2014. In addition, the jail time handed down in criminal cases declined to 24 months in 2015 from 36 months in 2014 whereas, in quasi-criminal cases, jail time rose to four months last year from two months in 2014.
The OSC also reports that it imposed three temporary cease trade orders (CTOs) and 21 freeze orders during the year (involving just less than $6 million) to protect investor s from possible illegal activity. This is in addition to the protective sanctions the OSC’s tribunal ordered, which included 59 CTOs, 43 registration restrictions and 41 director and officer bans.
“Ontario investors can be confident that our enforcement team is working hard to safeguard their interests,” says Maureen Jensen, chairwoman and CEO of the OSC, in a statement. “Using innovative enforcement tools to increase our reach and effectiveness, we are protecting investors and Ontario’s capital markets.”
The OSC launched a mediation program in 2015 as a way to help resolve enforcement issues, which has been used to conclude two cases so far, the regulator reports. The OSC is also planning a whistleblower program that will pay financial rewards for tips that lead to significant enforcement activity.
“The OSC’s vigilant and responsive approach to enforcement promotes a culture of integrity and compliance in Ontario’s capital markets,” says Tom Atkinson, director of enforcement at the OSC, in a statement. “Our active, innovative enforcement program is helping to protect investors from financial harm and sending a clear message to potential wrongdoers.”