Investigation and enforcement are core CSA responsibilities. By identifying violations of securities laws or conduct in the capital markets that is contrary to the public interest, and by imposing appropriate sanctions, the CSA deters wrongdoing, protects investors, and fosters fair and efficient capital markets in which investors can have confidence. Enforcement personnel of CSA member authorities deal with potential securities law violations identified by internal CSA member compliance and surveillance departments or as a result of complaints from market participants and the public.
The CSA’s enforcement activities complement those of other agencies with whom we cooperate and share information on matters of mutual interest. This allows the CSA to focus activities and prioritize resources where most appropriate.
Enforcement personnel of CSA members can bring matters before a specialized administrative tribunal which, in most jurisdictions, is the local securities commission. Such tribunals can, among other things:
- impose sanctions;
- issue cease trade orders against offenders;
- make exemptions unavailable to offenders;
- ban offenders from acting as corporate directors or officers;
- require the filing of specified disclosure;
- impose monetary penalties and the payment of costs; and
- prohibit offenders from disposing of funds, securities or other assets.
In some cases, enforcement personnel negotiate settlement agreements under which the alleged offenders submit to agreed sanctions. In some jurisdictions, these settlement agreements are approved by enforcement personnel; in others, they are subject to approval by the local securities commission or administrative tribunal. CSA members act jointly in approving some settlements and taking enforcement action.
Canadian securities regulators have conferred on certain self-regulatory organizations (SROs) the power to regulate the conduct of securities dealers, including mutual fund dealers, under the supervision of CSA members. The primary SROs involved are the Investment Industry Regulatory Organization of Canada (IIROC), the Chambre de la sécurité financière (CSF) and the Mutual Fund Dealers Association of Canada (MFDA). In the event of SRO rule violations, the SROs can impose administrative penalties on dealer members or their employees, including membership suspension or revocation, market access restrictions and fines.
Exchanges monitor compliance, by listed companies, with the terms of Exchange listing agreements and policies. Where appropriate, they can deny pre-approval of certain transactions, require corrective disclosure, halt or suspend trading and, in egregious cases, terminate a listing.
The Royal Canadian Mounted Police (RCMP) and local and provincial police forces investigate commercial crimes, including financial market fraud. The RCMP has established integrated teams to investigate financial crime. Certain CSA members have also established their own integrated teams, in partnership with police forces in their jurisdiction.
Provincial and territorial Attorneys-General or equivalents can bring contraventions of securities laws, as well as of criminal laws, before a court. In some provinces, enforcement personnel of CSA members can also bring securities law contraventions before a court. Fraud and other contraventions of the Criminal Code can attract stiff penalties including large fines and imprisonment. The sanctions available to courts for securities law violations are also more extensive than those available to securities regulatory authorities, including imprisonment.