OSC announces results of 2013 enforcement efforts

TORONTO - The Ontario Securities Commission (OSC) announced today the results of its enforcement efforts for the 2013 calendar year. Today’s announcement demonstrates the OSC’s continued commitment to deliver strong and effective enforcement for Ontarians with more criminal charges, concluded proceedings and sanctions secured in 2013 than in the previous year.

In 2013, proceedings were concluded against a total of 170 individuals and companies, up from 100 individuals and companies in 2012. Of these respondents , 71 were concluded by way of contested hearings before the Commission (60 in 2012), 95 by way of settlement agreements (36 in 2012) and four by way of court proceedings under securities legislation.

“We have a responsibility to protect investors and our capital markets,” said Howard Wetston, Q.C., Chair and CEO of the OSC. “That’s why the OSC is dedicated to delivering a vigorous and active enforcement program, one that will help us achieve our goal of confidence and integrity in our markets.”

The number of sanctions imposed by the OSC increased during the year and included 159 cease trade orders (80 in 2012), 67 director and officer bans, (49 in 2012), 118 exemption removals (72 in 2012) and 81 registration restrictions (58 in 2012). In addition, the OSC secured a total of 63 months in jail sentences against four defendants, up from a total of 21 months against two defendants in 2012.

New to the OSC’s enforcement arsenal in 2013 is the Joint Serious Offenses Team (JSOT), an enforcement partnership between the OSC, the Ontario Provincial Police Anti Rackets Branch and the Royal Canadian Mounted Police Financial Crime program. JSOT investigates serious violations of the law using provisions of the Ontario Securities Act or the Criminal Code of Canada.

The team includes former police officers, former Crown attorneys and forensic accountants who work closely with police agencies and the Ministry of the Attorney General to bring more cases to the courts.

The OSC also continued to work closely with its international and domestic partners on various enforcement files to achieve its enforcement goals in 2013. Last year, the OSC received an increased number of requests for assistance - a total of 68, up from 59 in 2012. Progress was also made in 2013 on a number of new policy initiatives intended to strengthen the OSC’s enforcement presence and effectiveness. In June of last year, the OSC hosted a policy hearing (link to transcript) to consider proposed new enforcement tools, which were announced on March 11, 2014 in Staff Notice 15-702: Revised Credit for Cooperation Program.

2013 Enforcement Data:

 
Total Proceedings Commenced:

Category	Number of cases 2013*	Number of Cases 2012
Illegal Distributions	6	6
Misconduct by Registrants	2	2
Disclosure Violations	-	-
Insider Trading	2	2
Market Manipulation	1	-
Fraud	9	15
Miscellaneous	7	5
Total	27	30

 

Proceedings Commenced - Respondents:

Category	Individuals 2013	Companies 2013	Individuals 2012	Companies 2012
Illegal Distributions	9	40	16	9
Misconduct by Registrants	3	3	4	4
Disclosure Violations	-	-	-	-
Insider Trading	2	-	12	1
Market Manipulation	1	-	-	-
Fraud	18	9	35	21
Miscellaneous	6	5	4	1
Total	39	57	71	36
* 2012 is the first year in which fraud is featured as a standalone category. Previously, fraud matters were included among other categories.

 

Interim Orders: Interim orders protect investors by prohibiting or inhibiting potentially illegal activity while an investigation is underway.

	Cases 2013	Individuals 2013	Companies 2013	Cases 2012	Individuals 2012	Companies 2012
Total	4	4	9	8	7	13

 

Concluded Proceedings: A proceeding is concluded when the Commission or the courts make a decision and any sanctions are ordered.

Category	Individuals 2013	Companies 2013	Individuals 2012	Companies 2012
Illegal Distributions	30	59	20	6
Misconduct by Registrants	3	5	8	7
Disclosure Violations	1	-	1	-
Insider Trading	2	-	2	-
Market Manipulation	1	-	-	-
Fraud	35	26	25	23
Miscellaneous	5	3	7	1
Total	77	93	63	37

 

How matters were concluded (by number of respondents):

Category	2013	2012
Hearing before the Tribunal	71	60
Settlement Agreement	95	36
Court Proceedings	4	4
Total	170	100

 

Protective Sanctions: The Commission can impose bans on future activity, such as trading in securities (cease trade orders), acting as a director or officer of a public company, and acting as or becoming a registrant. The Commission can also remove prospectus and registration exemptions available under the Act.

Category	2013	2012
Cease Trade Orders	159	80
Director and Officer Bans	67	49
Exemption Removals	118	72
Registration Restrictions	81	58

 

Monetary Sanctions: The Commission can impose monetary sanctions and bans on individuals and companies for violations of securities law or conduct that is contrary to the public interest. Adjudicative tribunals can also order a respondent to pay the costs of an investigation and/or hearing. The courts have the authority to impose fines, jail terms, and restitution.

Monetary sanctions include penalties, settlements and disgorgement. Disgorgement requires the respondent to pay the OSC the amount the respondent obtained as a result of the illegal activity.

OSC	Total Dollar Amount 2013	Total Dollar Amount 2012
Administrative Penalties/Settlements	$14,741,854	$13,648,572
Disgorgement	$40,242,705	$61,503,163
Costs	$3,176,936	$2,980,121
OSC Total	$58,161,495	$78,131,856

 

Courts
Restitution	$155,000	-
Court Total	$155,000	-

 

Cases ongoing before the courts, including criminal, as at December 31:

2013	2012
9	7

 

International Efforts:

Jurisdiction	Requests for assistance received by the OSC 2013	Requests for assistance made by the OSC 2013	Assistance files open as at December 31, 2013
International	17	19	25
United States	37	20	47
Domestic	14	7	23
Total	68	46	95

 

Jurisdiction	Requests for assistance received by the OSC 2012	Requests for assistance made by the OSC 2012	Assistance files open as at December 31, 2012
International	19	35	15
United States	30	14	25
Domestic	10	8	19
Total	59	57	59

 

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