The Ontario Securities Commission has approved a new rule that aims to improve the settlement process by allowing it to pre-screen settlement agreements.

Under the new rule, settlement agreements between OSC staff and respondents will still be required to be approved by the commission through a public hearing. However, the new rule allows the two sides to hold a secret settlement conference before a panel of one or more commissioners prior to a public hearing.

At the settlement conference, the panel will indicate whether or not it would be prepared to approve the settlement agreement if it were submitted for approval at a public hearing, the OSC explains. If approval is unlikely, the panel will discuss the grounds for its conclusions. This may lead to continued negotiations to try and reach a more acceptable agreement, or they may abandon the settlement process.
 
“Settlement conferences will be held in camera without public notice and all settlement discussions will be without prejudice. No record of the settlement conference will be made unless the parties request otherwise,” the OSC says.

The OSC says that the new rule will enhance the settlement agreement approval process by:

– increasing the efficiency of the commission’s settlement process, reducing costs, encouraging settlements and decreasing the number of lengthy merits hearings;

– providing a degree of flexibility to avoid high costs and time delays;

– balancing the requirement for open, transparent proceedings and the parties’ desire for greater certainty of outcome; and,

– supporting the settlement negotiation process by recognizing that joint submissions on facts and sanctions are arrived at through active negotiation between the parties and that settlement agreements should normally be approved where they are reasonable in the circumstances.

The new rule will apply immediately to all proceedings before the commission, including proceedings commenced prior to the adoption of the new rule.

IE