So, just what are we going to do about securities regulation in this country? For years, we have watched it fall increasingly short of its goals of protecting investors and fostering confidence in our capital markets.

Report after report pointing out shortcomings is issued and shelved until it is time to trot them out to support re-identification of well-known problems and solutions. Lately, the focus of these reports has been the inability of regulators to enforce compliance with securities regulation. The solutions designed to avert the crisis of confidence that struck following the Enron Corp. and WorldCom Inc. debacles have been colossal failures.

We’ve bumbled along in the hope that the establishment of the integrated market enforcement teams, combined with increased co-operation among regulators, would do the trick. However, this diversion simply allowed other stalwarts of the financial services industry to fly below the radar to design and flog toxic commercial paper to unsuspecting investors. The disastrous effects are now rippling through the financial system to Main Street. The scary part is that no one will step up and do something about the sorry state of securities regulation. We are mired in the shortcomings of politicians and governments who refuse to give anyone with the requisite vision a mandate to fix what is broken or is not working as well as it should be, and the necessary tools to do it.

Meanwhile, investor protection is more important than ever as more Canadians are forced into stock market investments to fund retirement needs. David Wilson, chairman of the Ontario Securities Commission, recognizes this: “[Canadians are] counting on us — the regulators and the securities industry — to give them confidence that the markets are fair and efficient. Market integrity not only contributes to the financial well-being of individuals, it fuels the competitiveness of our businesses and thereby supports the overall economy.”

However, he does not back up these politically correct words with an action plan and is seemingly content to wait for an explosive fraud to happen — although what he would do if it did is anyone’s guess.

Meanwhile, anyone who suggests actions that would contribute to the financial well-being of individuals is dismissively labelled as an “inves-tor advocate.” It’s appalling that the regulators themselves are not suggesting and implementing actions that would contribute to the financial well-being of individuals and are allowing the financial services industry to continue to block any proposals for such actions.

Securities regulators should be the “investors’ advocate.” Seventeen years ago, I was asked to identify regulatory strategies that would bolster this role. My recommendations were based on two core principles — fairness and integrity, and information and knowledge. The acknowledged common-sense recommendations, together with the systemic and structural changes I advocated, have continued to inform the endless deliberations on regulatory change that have been going on ever since.

Implementation of these recommendations would solve the problems the changes were designed to address. What is missing is vision, leadership and the will to level the tilted playing field that has become extremely lucrative for the financial services industry.

Investors have been abandoned by securities regulators. Investors’ only hope is to become, individually and collectively, more knowledgeable and aware. They must reduce the knowledge gap between themselves and the industry. They must learn how to manage their financial resources without resorting to high-cost, structured products no one understands and that could blow up in their faces.

Securities regulators need to go back to first principles and focus on the prevention of fraud, the full and timely disclosure of meaningful information, and ensuring the suitability for registration of those who advise the public or trade in securities. Regulators need to recognize that the problems with enforcement have their roots in shortcomings in their implementation of these principles and in their decision to allow trading and advising when there are inherent conflicts of interest.

The disclosure, registration, compliance and enforcement processes need to be managed as a continuum and not as four silos.

Only then will the credibility and ignominy that plagues our securities regulatory system be capable of reversal. IE