Minister's Five Year Review Committee Releases Draft Report on Securities Laws in Ontario

TORONTO - A committee appointed by the Minister of Finance says Ontario should assume a leadership role in working to resolve any remaining barriers to a single securities regulator responsible for Canada's capital markets activity. The Draft Report of the Five Year Review Committee, which follows more than two years of research and consultation, also recommends improvements to securities legislation in light of the increasing globalization of capital markets, and recommends increased enforcement powers for the Ontario Securities Commission.

"We make wide-ranging recommendations for Ontario's securities regulatory framework," said Purdy Crawford, Chair of the Committee. "In particular, we join the many regulators, politicians, securities firms and investors who have called for a single, co-ordinated approach to securities regulation in Canada. It is our very strong view that a nation which commands only two per cent of the global economy suffers daily from a regulatory regime comprised of 13 separate regulators."

As well, the Committee recommends improvements to financial reporting and disclosure by public companies, and improvements to Ontario securities legislation to allow regulations to be timely and balanced.

The Committee also recognizes the need for more effective enforcement powers to be available to the Commission and the courts. These powers would include giving the Commission the ability to levy administrative penalties and impose sanctions against market participants in a broader range of roles within the securities industry. As well, courts would be given the ability to impose longer jail terms. The Committee also recommends new laws against fraud and market manipulation.

Other key areas on which the Committee makes recommendations include:

• The need for a regulatory regime in Ontario which is harmonized nationally and internationally to the greatest extent possible, so as to make Ontario capital markets an attractive centre for both issuers and investors;
• The need for securities legislation to be flexible enough to adapt to an increasingly technology-driven environment;
• Improved regulation of market participants including registrants, self-regulating organizations and mutual fund organizations;
• Extending liability for disclosure by public companies to purchasers in the secondary market, and a corresponding change to the rules governing which purchasers may sue an insider for illegal insider trading; and
• Enhancing fundamental shareholder rights.

"Some of the measures we propose are housekeeping changes to update requirements while some are intended to streamline the regulatory burden. Others are more far-reaching in their potential impact," said Mr. Crawford.

As a result of the Securities Amendment Act, 1994, the government is required to appoint a committee to review the legislation, regulations and rules relating to matters dealt with by the Ontario Securities Commission every five years. The Minister of Finance's Five Year Review Committee was formed in March 2000; the report issued today solicits public comment on the issues considered and on the Committee's recommendations. Comments will be accepted until August 15, 2002. The Committee will then reconvene to carefully consider comments received and prepare a final report for submission to the Minister of Finance.

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