Securities shaming hasn’t been beneficial

It turns out that publicly shaming violators of provincial securities laws is an exceptionally poor way of collecting unpaid penalties but some Canadian regulators say they will continue to operate the websites anyway.

In the five years since the Ontario Securities Commission launched its “delinquent respondents list,” a website page designed to expose violators of securities law who haven’t paid their fines and other sanctions as ordered, only 16 of 432 names have been removed — 13 because they paid up and three because they’ve started payment plans.

Similarly, two years after the Alberta Securities Commission announced it was posting the names of violators of securities laws who don’t pay, a total of eight debts for about $525,000 have been collected.

That leaves almost half a billion dollars owed by nearly 600 names since 2005 between the two lists as of June.

Not even the commissions agree on whether the sites are effective, fair or worthwhile — only five of the 10 provincial bodies use them.

“Fining somebody and banning them from the markets — when they weren’t operating in the markets in the first place legitimately, and fining them when you know they’re never going to pay — doesn’t really do much,” said Marian Passmore, director of policy for the Canadian Foundation for Advancement of Investor Rights.