Regulators handed out fewer fines last year, but returned more money to investors

Monetary sanctions ordered by securities regulators were down significantly in the past year, but restitution orders were up, according to the Canadian Securities Administrators’ (CSA) latest enforcement report.

CSA members concluded 43 enforcement matters involving 93 respondents in the year ended March 31, ordering a total of $20 million in sanctions and administrative penalties, and more than $42 million in restitution, compensation and disgorgement.

Although the number of concluded cases and the value of monetary sanctions were down substantially from the previous year — when the CSA concluded 75 matters and ordered $45.6 million in fines — restitution, compensation and disgorgement amounts were up significantly from the previous year’s total of $13.8 million.

Covid-19 forced CSA members to conduct enforcement investigations and hearings virtually last year. Virtual hearings made it easier for witnesses and respondents in remote locations to participate in hearings, noted Louis Morisset, chair of the CSA and president and CEO of the Autorité des marchés financiers.

“Given the effectiveness of [virtual] hearings, some CSA members are likely to continue to offer them as an option,” Morisset wrote in the report.

The CSA saw a significant increase in investor alerts sent out over the past year: 159, up 140% from the 66 alerts sent out the year before.

“This year, we saw an unfortunate rise in wrongdoers who attempted to capitalize on the uncertainty related to the pandemic and the economy, a common occurrence with any significant market or news event,” Morisset wrote.

The CSA participated in the North American Securities Administrators Association’s (NASAA) sweep for Covid-19 investment scams, uncovering 64 of the 150 frauds and schemes identified by NASAA, the report noted.

CSA members ordered a total of 60 market bans in the past year, including 38 bans against individuals and 22 bans against companies — down from 65 individual bans and 33 company bans in the previous year. Eighteen of the individual bans ordered in the past year and all but one of the company bans were permanent.

Quasi-criminal enforcement cases in British Columbia, Ontario and Quebec led to six individuals receiving a total of 13.4 years in jail, with sentences ranging from five months to 4.5 years.

One criminal case led to six individuals being found guilty under the Criminal Code and one person sentenced to a two-year jail term.