B.C. regulator gets new powers

(May 6, 2004) The British Columbia Securities Commission (BCSC) will get tougher new enforcement powers under the province’s new securities act, introduced yesterday.

If the legislation passes, the commission’s orders will carry the same weight as court orders, allowing the BCSC to compel witnesses to testify. In addition, the regulator will be able to levy fines of up to $1 million and confiscate improperly obtained profits.

“The new legislation strengthens investor protection through increased enforcement powers, stronger sanctions and penalties, and broader remedies for investors to sue for damages from misleading disclosure,” said BCSC chair Doug Hyndman in a statement.

The bill, the result of a two-year review by the BCSC, also increases the maximum court penalties for securities violations to $3 million or three years in jail. Higher penalties apply in insider trading cases.

“The new securities act reduces bureaucratic paperwork and leaves behind the overuse of detailed and prescriptive rules in favour of a results-based approach, founded on time-tested principles of investor protection — disclosure to investors, and the regulation of dealers and advisors,” the B.C. government says.

The act contains prohibitions against misrepresentation, fraud, market manipulation, unfair practices, trading on inside information and front running.

The Ontario government passed similar legislation in 2003, but a change in government prevented the bill from being enacted.

Ross Sherwood, CEO of Vancouver investment firm Odlum Brown, says the B.C. legislation replaces regulations he calls “outdated and ineffective.”

“If it works as well as it should, the B.C. legislation will bring in stronger enforcement, real cost savings and become a template for the rest of Canada,” Sherwood added.

Tougher penalties and enhanced investor protection comprise two of B.C.’s proposed changes to the province’s regulatory system. Three others — continuous market access, a code of conduct for dealers and advisors, and firm-only registration — will be contained in detailed rules to be published for comment by the BCSC in the coming months.

The entire legislative framework is expected to be in force by the end of the year.

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com