Enforcement cases up, penalties down last year: CSA report

Canadian securities regulators issued more than $30 million in fines and commenced 59 enforcement cases last year, with increased attention on cryptoassets, a report from the Canadian Securities Administrators (CSA) says.

The 2021–22 enforcement report, which covers the year ended March 31, showed the regulators ordered $15.5 million in sanctions and $14.9 million in restitution, compensation and disgorgement penalties. The roughly $30 million in fines compared to more than $60 million issued the previous year.

The 59 enforcement matters commenced in 2021–22, which involved 139 respondents, was up slightly from 52 the previous year.

Regulators concluded 52 cases, which led to 44 individuals and 13 companies being banned from capital markets. All 13 companies faced permanent bans, compared to about half the individuals.

The 52 concluded cases compared to 43 in 2020–21.

Illegal distribution cases accounted for the most new enforcement matters (41) and the most concluded (29). Disclosure violations and fraud (31 each) were the other most common categories of new cases.

The CSA also took action to clarify and enhance regulation in 14 cases related to crypto, the report said.

The message in the report from CSA chairman Louis Morisset said regulators refined techniques to analyze cryptoasset trading and disrupt misconduct.

“Unfortunately, this past fiscal year, investors reported instances of high-pressure sales tactics being used to lure Canadians into fraudulent investment offerings, particularly related to cryptoassets,” Morisset wrote. “The ease of using social media and the internet to disseminate false information, as well as the escalating market interest in cryptoassets, were likely factors.”

Six individuals received jail terms under securities acts last year, with sentences ranging from three to 36 months, the report said. Four individuals were found guilty under the Criminal Code, with one receiving a six-year jail term. Five new Criminal Code cases commenced last year.

Staff

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