Law Times

PAGE 14 FOCUS MAY 12/19, 2008 / LAW TIMES etting the provinces and the federal govern- ment to sing from the same song sheet on a plan for a national securities regulator still remains an impossible dream. That there's a need — de- mand — to unite the patchwork of jurisdictions into a single co- hesive format is undisputed. "We have to recognize the evidence is no longer just an- ecdotal but factual, and we are a laughingstock in the global market because of our securi- ties regulatory system," says Andrew Fleming at Ogilvy Re- nault LLP. "The recent credit crisis has shown us we're living in a world where global regula- tion is a necessity, and in Can- ada we deserve to be ashamed because we don't have a system which will blend in with an international global regulatory environment." Even David Wilson, chairman of the Ontario Securities Commis- sion agrees Canada ranks poorly. "There is, I think, a common misconception that Canada doesn't treat securities regula- tion and enforcement seriously enough," said Wilson in a speech Debate over national securities regulator drags on G BY IAN HARVEY For Law Times to the Economic Club of To- ronto last month. "There's a debate about whether resourc- es are used effectively. Can we do better? Of course." Wilson called for a com- mon securities regulator and noted the impetus is "firmly in the hands of our politicians." "But we've been talking Gowling Lafleur Henderson LLP in Ottawa. "And the de- bate is not only about the best system to protect local interests but also there's a real tug-of-war going on as to who will domi- nate. It's a bit of a minefield." It's clear a national regu- about this for 20, 40 years and we're not getting anywhere," Fleming says. "People are bored and don't want to talk about it." Still, he says, the battle must continue and those in the industry — including himself — must continue to be proactive and positive. Philippe Tardif at Borden Ladner Gervais LLP notes a recent announcement by Aus- tralia it was integrating its secu- rities regulators into a national body and opening talks with the U.S. around mutual un- derstanding and recognition is seen as another blow to Canada. "We have had recognition of latory authority isn't going to be set up overnight, he said, and the passport pro- posal seems to be the scheme gaining most traction. It would see all provinces set common standards for securi- ties issuers so that a prospectus approved in one province would be accepted in the others. The plus is that it allows The debate is not only about 'the best system to protect local interests but also there's a real tug-of-war going on as to who will dominate. It's a bit of a minefield,' says Guy David. DD LT RX3RDB-04 Frntr ad 5/1/08 2:39 PM Page 1 disclosures with the Securities Ex- change Commission in the U.S. but only that," he says. "This is seen as disappointing because we weren't asked to the dance first because Canadian security laws aren't perceived as robust." just can't agree on how we get there, and in the interim Cana- da — and by extension Ontario as a mecca for financial services activities — continues to be seen as a laughingstock by other developed countries. "There's a lot going on behind the scenes," says Guy David of The problem is political: We proval here in a duplicate pro- cess, though that will be offset somewhat by the adoption of common standards. However, it also makes Ontar- io the default regulator and cre- ates headaches for the industry. Still, in the absence of some- thing better, it's a step, though far from perfect, Fleming says. Demands for a national regu- each province to exercise its ex- pertise in local industry: B.C. in oil and gas and mining, Quebec in telecommunica- tions for example, says David. The hiccup is that the OSC has opted out, meaning issuers wanting to sell in On- tario will still have to get ap- recognition but the need for a co-ordinated national enforce- ment strategy," he says. Separating the "church and state" would be an important first step, says Kyle. "It's too clubby now," Kyle says. "They are all from the same industry and all connect; it's almost incestuous." Crucial to any restructuring, says Kyle, is access to the adju- dication process — something he says retail customers don't have now and what is prompt- ing frustrated investors to turn to the class action process. "As a retail investor we can't go to the OSC, they just direct us to the SROs, the self-regulat- ing organizations like the Invest- ment Dealers Association, but they don't have any real ability to do anything." The pressure from a lack of a strong national regulator will only lead to more debacles, says Stan Buell of the Small Investors Protection Association, a group founded in the wake of the Bre- X meltdown 10 years ago. As Buell notes, even with all Office Furniture that will leave your clients and employees with a positive lasting impression. lator resonate far beyond the windy canyons of Bay Street, however, with consumers also crying for action. Small investor advocate Robert Kriya Series Executive High Back Multi-Tilter Chair Kriya is loaded with ergonomic features! Ratchet back height adjustment, independent infinite position back angle adjustment, seat depth adjustment, infinite tilt lock control and adjustable forward seat tilt angle allows you to adjust the chair for your personal comfort. Also has adjustable pivoting headrest with height and width adjustable armcaps that rotate 30°. Also available in Black or Cabernet. C U PREFERRED SUPPLIER Product code #28079-02 E yourONE source supplier for dyedurham.ca • Phone: 1-888-393-3874 • Fax: 1-800-263-2772 OFFICE & FURNITURE PRODUCTS Office & Furniture Products • Corporate Promotional Products Printing & Graphic Services • Law Office Essentials Corporate Supplies • Search & Registration Services www.lawtimesnews.com Kyle runs a web site, www.inves- torsvoice.ca, which has been lobby- ing for change for the last decade. "We're saying that they'd better fix it now or the federal government will be paying for it through the social safety net when millions of Canadians re- tire without enough money in their registered retirement savings plans to carry them," says Kyle. If not a national regulator then at least a national adjudi- cator, says Kyle, one which will apply the harmonious standards of each jurisdiction in an acces- sible but distinct forum sepa- rated from the enforcement and regulatory bodies. Tardif says the concept of a more separated process at the provincial level has been dis- cussed before, one that would install a distinct and physically separate tribunal than the one that exists now. "Perhaps the most impor- tant development trend to a national securities regulation is not so much common rule to the L'Autorité des Marchés Financiers (the Quebec Securi- ties Commission) as setting the benchmark for prosecutions two years ago when it extracted more than $3 million, including $1.5 million in punitive dam- ages from former CIBC Wood Gundy broker Harry Migirdic. "Quebec brought every- thing under one roof three years ago, insurance, securi- ties, mutual funds, and they will look into complaints from small investors," says Buell. Both Kyle and Buell are hopeful, however, that the fed- eral government is prepared to take a leadership role despite the political risks, noting Minister of Finance Jim Flaherty appears to be focused on the issue. Fleming agrees that Flaherty seems best positioned to bring about change. "He certainly seems to have had a positive influence," he says, a notion Tardif supports also. "He [Flaherty] has been the its resources the OSC couldn't nail anyone for salting the as- says and inflating the value of the stock. "A national regulator is not going to happen, for one because Quebec is not going to lower its standards," he says. Both Buell and Kyle point most vocal finance minister on the topic," agrees Tardif. "He's regularly in the media talking about it." LT DON'T COURT DISASTER Keep up-to-date on the latest judicial developments by reading Law Times CaseLaw on pages 17 - 19 a D Y I n E 9 p N d & 9 C n D R m a 1 H a A n M S a 8 W e ' r e y C i o a

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