Wise persons wanted: Committee members key to latest securities initiative

(November 20, 2002) Finding the right people for a new committee on securities regulation could be the key to its success, industry experts say. Yesterday, Saskatchewan lawyer Harold MacKay recommended that Ottawa and the provinces create a committee of up to six “wise persons” to make suggestions on improving the country’s regulatory system.

MacKay said the committee should weigh the benefits of expanding the current provincially run securities system through greater harmonization against the benefits of a single national regulator. The committee should be set up as quickly as possible and deliver its final report by September 2003, he said.

“I think Harold MacKay did a good job of what he was asked to do,” securities lawyer Glorianne Stromberg told Advisor.ca. “I think he has articulated Canada’s needs very well and has identified a good and inclusive process for moving forward to finding solutions. The key is finding the right mix of ‘wise persons’ who can navigate this next step.”

Stromberg says MacKay does provide a clue in his report when he says Ottawa should look to the provinces to help identify potential committee members, but she cautions against appointing people only interested in maintaining the status quo.

In a letter to federal Finance Minister John Manley, MacKay said that while the committee should be broadly representative in geographic terms, the postings need not be divided up regionally. He added that expertise in securities regulation should not be a major factor.

“The people leading any new process must be and be seen to be impartial and open-minded, and their terms of reference unbiased in favour of any outcome,” MacKay said.

Jim Turner, a senior partner at Toronto law firm Torys LLP, says he thinks MacKay wants high-profile people with broad support and respect among Canadians. “He wants a cross-section of people familiar with the capital markets,” Turner said in an interview with Report on Business television.

Given her strong record of working on behalf of investors, Stromberg could be a candidate for the committee, but says she hasn’t been approached. “It would be interesting if they did ask me, but I don’t know who they’ve got it mind.”

“I think it’s essential they attract people who don’t have any preconceived notions,” says Alberta Securities Commission chair Stephen Sibold. But he admits that could be a challenge, considering that most high-profile people in the industry have already expressed an opinion on the topic.

Sibold says the committee must at least contain members with different views and from different parts of the country. “If it’s stacked with people who are only in favour of a national commission, obviously it’s not going to be a very credible report,” he told Advisor.ca.

Sibold isn’t sure that forming another committee to study securities regulation makes sense, given that the issues are already known and that politicians will make the final decision on any changes to the system.

“It really comes to whether there is political will on the part of provincial governments,” he says. “Having another committee — I’m not sure it’s going to be that productive because whatever they come up with is not going to be binding on any government.”

No matter what the outcome of this latest initiative, Stromberg believes that ultimately, Canada will end up with some sort of national regulatory system. “This is all part of a continuing process moving inevitably toward a rationalization of the regulatory system that is likely going to end up with a single system that works across the country with strong presences in each province,” she says.

“Clearly, a single commission would be preferable,” agrees Turner. “You’d have the same rules being enforced in the same manner across the country.”

That doesn’t mean harmonization efforts, such as the uniform securities legislation (USL) project, are a waste of time, Stromberg adds. “This is an essential process, because if you have agreement on what the principles and the rules should be, then it becomes much easier to devise a method of more effectively delivering those services.”

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Sibold, who is spearheading the USL project, agrees. “Regardless of which way we go, uniform securities legislation has enormous merit, so I’m focusing on that,” he says. Sibold hopes to release a USL concept proposal by the end of January.

Stromberg says harmonization should be looked at as one step toward the final destination of a single national regulator. “Ultimately, I believe it is an evolutionary process and we will end up there whether that’s where people were intending to go or not. I think it’s the inevitable result.”

Filed by Doug Watt, Advisor.ca, dwatt@advisor.ca.

(11/20/02)