IDA conference update: Oliver calls for super self-regulator, more enforcement muscle

(June 14, 2004) IDA president and CEO Joe Oliver says the financial services industry and the public it serves might well be better off with a single self-regulatory organization combining the regulatory powers of the IDA, the MFDA, the TSX and the Montreal Bourse.

“We could create a single organization that would be functional for more fair, efficient and effective self-regulation,” said Oliver in his opening address at the IDA’s 88th annual conference in Mont Tremblant, Quebec.

With a separate securities commission for each province and territory, plus the umbrella Canadian Securities Association, this country’s fragmented regulatory landscape is well known. But Oliver says the self-regulatory system is also hobbled by fragmentation.

Noting that “new organizations rapidly develop a pride of place, a sense of indispensability and a natural desire for survival, if not expansion,” Oliver argued that a combined SRO would “enhance the competitiveness and reputation of the Canadian capital markets.”

As for the disparate agendas of the various provincial regulators, Oliver suggested that individual commission initiatives, no matter how admirable in principle, “should be adopted nationally, or not at all.”

Enron, Nortel and the U.S. mutual fund scandals have all led to increased scrutiny of financial services oversight on both sides of the border. But American regulators have largely been seen to be more effective and Canada’s reputation for dealing with white-collar crime is suspect. “We have to close the enforcement gap — keep investors open to Canada,” said Oliver. “Everyone agrees that we simply cannot allow Canada to acquire a reputation as a haven for white-collar crime.”

For its part, Oliver says the IDA is doing what it can with the powers it has, successfully completing 150 prosecutions and imposing $13 million in fines over the past three and a half years. But he noted the IDA is hampered by a lack of power to compel testimony and documents from individuals and firms to assist in an investigation or hearing.

Oliver would also like to beef up the IDA’s power to effectively enforce the monetary penalties it imposes. “It is not that anyone has raised any objections in principle to these requests,” he said. “The CSA just won’t support them, even though the commissions quite properly hold us to account for our enforcement performance.” Oliver added that the IDA is now asking provincial ministers to include these powers in the Uniform Legislative Act in each province.

The IDA annual conference continues through Tuesday.

Filed by Darin Diehl, darin.diehl@advisor.rogers.com.

06/14/04