Law Times

PAGE 10 Is OSC backing down on no-contest settlements? Observers wonder whether commission is shy of public backlash FOCUS BY MICHAEL McKIERNAN Law Times O ne of the leading ad- vocates for no-contest settlements at the On- tario Securities Com- mission has urged the regulator to stick to its guns aſter the idea seemed to drop off the radar. The OSC floated the settle- ments in a staff notice on pro- posed enforcement changes a year ago, a move that elicited a barrage of vociferous and divisive responses on both sides of the de- bate. The regulator responded in December 2010 by promising public hearings on the issue but has yet to schedule any. Some observers suggest the negative reaction has scared it off. "There was a backlash from some of the provincial securi- ties regulators as well, so it does seem to be the unwanted child right now in some circles," says Wendy Berman of Cassels Brock & Blackwell LLP. "My hope would be that it is not seen as some hot potato that gets dropped because I think it could be a very effective tool for the regulator. When it comes to IP in Canada, We're Well Read Ridout & Maybee LLP: Editors of the Canadian Patent Reporter it all starts somewhere www.ridoutmaybee.com Street securities litigators who signed a submission filed with the OSC in support of the proposal. She says no-contest settlements shouldn't be the solution for every case but argues they could help cut the huge amount of time and resources oſten devoted to settle- ment negotiations. "The backlash was all about Berman was one of 13 Bay " the floodgates opening and the sky falling, but no-admission- type settlements were always envisioned as a limited-use op- tion," she says. "It offers flexibility in an evolving world. Timely conclu- sions should be one objective in settlement negotiations and this offers that." OSC spokesperson Carolyn said Wetston. "We need to understand Business News Network, OSC chairman Howard Wetston said he was pleased that the proposals had spurred a debate and noted he was waiting on developments in the United States, where the settlements have a decades-long history, before going any further. "We need to have the debate, " whether there is a more effective way to achieve the resolution of these cases. Some of the policies associated with no-contest settle- ments in the U.S. is not dissimilar to what we are trying to achieve here. And so awaiting some of those decisions analyzing the pol- icy implications I think has been very helpful. So we haven't yet concluded that we are not going to proceed with it but we are still mindful of the tradeoffs that are associated with these settlements." One of the recent major U.S. Shaw-Rimmington said in a state- ment that staff are still reviewing the comments on the proposals. "We are taking the time to carefully consider and analyze all of the issues for Ontario' markets, including developments in other jurisdictions, before mak- ing any decisions on next steps in terms of a policy hearing, s capital In a recent interview with the Untitled-1 1 12-01-23 9:05 AM AN ESSENTIAL COURTROOM REFERENCE FOR ONTARIO CIVIL LITIGATORS NEW EDITION ONTARIO CIVIL PRACTICE 2013 GARRY D. WATSON, Q.C. AND MICHAEL McGOWAN Ontario Civil Practice 2013 is a complete courtroom reference featuring expert commentary on how the rules of civil procedure are interpreted and applied in specific situations. 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ORDER # 985097-65203 $100 Hardcover + Softcover + CD-ROM + Mobipocket eBook August 2013 approx. 3800 pages (hardcover) approx. 1100 pages (softcover) 978-0-7798-5097-6 Annual volumes available on standing order subscription Practice Advisor available on standing order subscription upon request Multiple copy discounts available Shipping and handling are extra. Price subject to change without notice and subject to applicable taxes. BlackBerry is a registered trademark of Research in Motion Limited AVAILABLE RISK-FREE FOR 30 DAYS Order online at www.carswell.com AUTHORITATIVE. INNOVATIVE. TRUSTED. www.lawtimesnews.com " she said. cases dealing with no-contest settlements concerned a pro- posed $285-million settlement between the Securities and Exchange Commission and Citigroup Global Markets. U.S. District Judge Jed Rakoff caused a stir in November 2011 when he rejected the deal while citing fears over its fairness. The case is now before the U.S. Court of Ap- peals for the Second Circuit. "If the allegations of the com- plaint are true, this is a very good deal for Citigroup, wrote. "Even if they are untrue, it is a mild and modest cost of do- ing business." Doug Worndl, a class actions " Rakoff partner at Siskinds LLP, says the American experience with no- contest settlements should be enough to stop the OSC from heading down the same road. "In our view, the use of no- contest settlements has allowed corporate wrongdoers to avoid accountability, and that' something we should allow to be imported into our jurisdiction," he says. "I think no-contest settle- s not OctOber 1, 2012 • Law times ments serve no good for the twofold purposes of securities law, which are capital market integrity and consumer protec- tion. It' are held to account, which in- volves acknowledging wrong- doing if you're settling or, in the alternative, having regulators prosecute them so that finders of fact can make whatever findings the evidence supports." Michael Watson, a former en- s important wrongdoers Call Toll-Free: 1-800-387-5164 In Toronto: 416-609-3800 forcement director at the OSC who spent 10 years in the role, has also weighed in on no-con- test settlements and calls them "wrong in principle" in his sub- mission. Casting doubt on the time and financial savings they could present, he also argued that the majority of settlement efforts go into the wording and that re- spondents will be just as keen to get that right whether or not they admit to wrongdoing. LT

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