Alberta moves to streamline securities sanctions
Alberta, one of the handful of provinces strongly opposed to a national securities regulator, has become the first jurisdiction in Canada to automatically impose sanctions handed down by a securities commission in another province.
In the latest move to streamline regulation across the country without forging a new, co-operative federal-provincial capital markets regulator, Alberta’s securities laws were changed, effective Canada Day, to automatically reciprocate most new sanction orders across Canada. The idea is to create a “faster and more efficient system,” according to a spokesperson for the Alberta Securities Commission.
“Alberta is the first jurisdiction in Canada to enact such a law,” Alison Trollope said.
Prior to the change, reciprocal orders based on sanctions in other provinces could be imposed, but the ASC was required to file a notice of hearing and carry out a separate, often time-consuming process.
“This provision will take a good system of inter-jurisdictional reciprocation of enforcement decisions, and make it even faster and more effective,” Bill Rice, chair of the ASC, said in a statement.
“When there are findings or admissions of a breach of securities laws, or acts contrary to the public interest in another province or territory, sanctions such as cease-trade orders and director and officer bans will instantly have effect in Alberta as well,” he added.
Officials in Alberta, Quebec, and Manitoba have indicated those jurisdictions have no interest in joining the Cooperative Capital Markets Regulatory System. The federal government is backing the closest thing Canada has to a national regulator, along with the provinces of Ontario, British Columbia, New Brunswick, Saskatchewan, and Prince Edward Island. The Yukon is also a participating member.
Robert Staley, a veteran securities lawyer at Bennett Jones LLP, declined to speculate about the rationale for Alberta’s amendment this week, but he said “it gets you to the point of automatic enforcement, short of joining a national regulator.”
“With a national regulator you don’t need provisions of this nature, as any order made applies across all participating jurisdictions,” he said.
The next step in the creation of the proposed federal-provincial regulator is the drafting of initial regulations, along with a draft of provincial, territorial, and federal capital markets legislation, which are expected to be released for public consultation sometime this summer.
The idea of creating a national system of capital markets regulation to replace Canada’s patchwork of 13 provincial and territorial regulators has been around for about 50 years.
In the meantime, attempts have been made to streamline the system, such as the creation of a “passport” regime that allows a firm or individual to obtain a decision on capital market registration or a prospectus filing or exemption from a principal regulator that is then accepted across the other jurisdictions — with the exception of Ontario.
The Ontario Securities Commission retains the right to reject
With a national regulator you don’t need provisions of this nature, as any order made applies across ... jurisdictions. ROBERT STALEY, securities lawyer
decisions made by other provincial regulators, a sore point for provinces that resist national regulation and see the passport system and reciprocal enforcement orders as a viable alternative.
Alberta’s latest move to streamline regulation across the country short of joining the co-operative regulator could face challenges, suggested a veteran securities lawyer.
For example, a person or firm with “absolutely no connection with Alberta” could fight sanctions automatically imposed in that province, said the lawyer, who spoke on the condition he would not be named.