Ontario Securities Commission Category Archive

Dalton McGuinty has gone on the record: "I won't raise taxes!"

A fine sentiment, but in the background, the actions of one arm the Ontario government is about to seriously impact on the ability of another arm of the government to raise funds through Ontario Savings Bonds. A lack of ministerial oversight has brought this absurd situation to a head.

Think about it. OSBs raised $1.3 billion for the government in 2007. If that revenue stream is squeezed, then how can Dalton McGuinty keep his promise?

The Ontario Bar Association is demanding to see the legal opinion used by the authors of Bill 151, the omnibus bill in front of the Ontario legislature that undermines solicitor-client privilege by increasing the power of the Canadian Public Accountability Board, that justifies those powers. This could put Dalton McGuinty's government in a tricky situation, especially if it turns out Attorney General Michael Bryant did not deliver any such opinion to Finance Minister Greg Sorbara or Minister of Government Services Gerry Phillips. This flies in the face of the efforts of the Ontario Securities Commission to increase its powers. There is a showdown shaping up.

On the heals of the story in Canadian Business of financial regulators in Saskatchewan persecuting Brian Mallard, Terence Corcoran at the National Post writes about a similar case involving the Ontario Securities Commission, and comes to a similar conclusion.

In the world of mutual funds, regulators are supposed to be vigilant in making sure advisors follow the rules in order to make sure clients are getting fair advice. In this month's issue of Canadian Business, there is a long and detailed story about just how that system is simply not working because regulators assume every is cheating, and that any act justifies proving that allegation true.

Tim Hudak, the MPP for Erie-Lincoln, and the finance critic for the Progressive Conservatives at Queen's Park in Ontario, has focused in on the changes being proposed to expand the powers of the Canadian Public Accountability Board. The CPAB is a creation of the Ontario Securities Commission (in concert with other provincial securities commissions), and in Bill 151, Dalton McGuinty's Liberals propose to require accountants to provide all material used to prepare audits to the CPAB for inspection, including material that is considered privileged.

In 2005, the Ontario Securities Commission loses a case involving solicitor-client privilege extended to accountants. In 2006, the Ontario government tables legislation that changes the rules so that the protections that the court determined existed are explicitly eliminated.

Coincidence?

The Ontario Bar Association has written a letter to Ontario's Liberal Finance Minister Greg Sorbara concerning Bill 151. In it, the OBA expresses its deep concern over the erosion of solicitor-client privilege and recommends that the courts, not the Ontario Securities Commission or the Canadian Public Accountability Board, be the arbiter of when that privilege is to be breached.

The Securities Act, which defines the powers of the Ontario Securities Commission, is undergoing changes because of Bill 151, the Ontario provincial budget bill (An Act to enact various 2006 Budget measures and to enact, amend or repeal various Acts). One of those changes pulls the curtain away that until now hid the true relationship between the OSC and the elected government at Queen's Park.

We now know who is in charge. Here's a hint -- it's not anyone you voted for.

Recently I wrote about a press release that showed how the Ontario Securities Commission was caught helping the Toronto Stock Exchange out of a jam by retroactively changing rules. This was in relation to an action taken against Northern Securities.

Though it was clear from the press release what was going on, I really didn't have any background on the litigation itself, nor did I have a view of the bigger picture. Terry Corcoran at the National Post knows all about this stuff, though, and he's written a column in today's paper on this very case. It's worth reading to help understand the true scope of the issue that I tried to explain.

Clearly, the OSC is in need of oversight. The lawyers and judges on its Board of Commissioners are simply not performing that role.

Six years ago, people were talking up the idea of merging the Ontario Securities Commission and the Financial Services Commission of Ontario. The idea has long since been shelved, if not quite officially, but the OSC has maintained a special account with $12 million in it to use on the day that they take over credit unions, loan and trust companies, pension funds, and insurance brokers.

When you reach the age of six or so, you learn to respect the rules of the game. Before that, kids make up the rules as they go along, usually in response to losing circumstances. In kids, it's cute. But when adults do it, it's sort of pathetic.

This was what first came to mind when I read about the Ontario Securities Commission trying to win a fight with Northern Securities by changing the rules, retroactively.

Pathetic.

But as I thought about it, I came to think that this is a lot more serious than just a silly attempt to win a case no one is paying attention to.

Dalton McGuinty's Liberal government in Ontario has tabled a budget. But hidden in the bill, known as Bill 151, is a change to how the Canadian Public Accountability Board functions. That change to the powers of the CPAB, a creation of the Ontario Securites Commission, destroys any semblance of privacy, undermining our Charter rights against unreasonable search. I'm not sure who to be more angry with, the Ministry of Finance for writing such a bill, or the the Attorney General's office for not putting the brakes on it before it was tabled.

Updated: Added an addendum -- there is a line in the bill concerning CPAB in which the disclosure of information must occur even if the information is privileged. Expect the legal profession to get into the fight now that the government is trying to weaken the concept of privilege.

Terence Corcoran takes another shot at the Ontario Securities Commission in his latest column in the National Post, this time focusing on the Frank Dunn case. He highlights the legal temper tantrum being thrown by the OSC at the thought of the courts trying to assure the legal rights of someone the OSC has targeted.

Terence Corcoran of the National Post looks at the Ontario Securities Commission, and a recent ruling in which the courts essentially said that this was too complicated for the judges to understand, so they ruled that they hoped the OSC was right.

Actually, the courts have ruled, even if you could prove that the OSC was wrong, the courts aren't going to do anything to fix it.

Well, doesn't that just make you feel all warm and fuzzy.

The mainstream media is reporting that the OSC is threatening to drop the case against Frank Dunn, news first reported on this blog. The report does a good job of explaining the issues of the Dunn case, but I think misses the bigger picture, that the filing by the OSC is after much more than merely complete control of how the investigative teams in the Dunn case are to be constituted, but that it wants the courts out of the business of the OSC altogether.

In a very lengthy post, I look at an ongoing court case the brings into question the role of the Ontario Securities Commission, the breadth of its powers, and how the Charter rights are at risk. The case involves Frank Dunn, the former CEO of Nortel, who is under investigation related to financial restatements. His legal team is arguing that an 18-year-old agreement with the American Securities and Exchange Commission has allowed a joint investigation to be mounted, the side effect being that the SEC can use the OSC to get around American constitutional constraints that would otherwise limit its ability to use evidence against Dunn in an American court. Interestingly, the OSC is more worried about the courts establishing a precedent that there ought to be oversight of the OSC than it is about losing Dunn.

The Investment Dealers Association has released a report on securities regulation. It recommends a dramatic reduction in the power of the securities regulators, and a fundamental realignment and redistribution of powers. Needless to say, the Ontario Securities Commission doesn't like it.

Scary title, eh? Well, you should be worried. An accountant is privy to all sorts of confidential information. The conditions under which that information could be disclosed to a third party is about to undergo a major exansion. Accountants are about to become agents of the State.

After thinking about the issue of Greg Sorbara and the management of the Ontario Securities Commission, I started digging around. Who knew so much was going on without any legislative oversight? It makes me nervous.

Dalton McGuinty announced a cabinet shuffle today. As is typical with Ontario's Liberal government, it is reactive, and not proactive. There is a long-standing cabinet problem involving Greg Sorbara, the Ontario Securities Commission, and the Ministry of Finance, that has yet to be addressed, and is still not being addressed.