Investigation and enforcement are core CSA activities. By identifying contraventions of securities laws or conduct in the capital markets that is contrary to the public interest, and by imposing appropriate sanctions, the CSA deter wrongdoing, protect investors, and foster fair and efficient capital markets in which investors have confidence. Enforcement personnel of CSA member authorities deal with potential securities law violations identified through internal CSA compliance and surveillance or as a result of complaints from market participants and the public. The CSA’s enforcement activity complements that of other agencies, with which we cooperate and share information on matters of mutual interest. This allows the CSA to focus activities and 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 impose sanctions including orders that trading in securities cease or that exemptions are unavailable, bans on individuals acting as corporate directors and officers, mandatory filing of specified disclosure, monetary administrative penalties and payment of costs. Enforcement personnel often negotiate settlement agreements under which those alleged to have contravened securities laws submit to agreed sanctions. In some jurisdictions settlement agreements are approved by staff; in other, cases they are presented for the approval of the local securities commission or tribunal. Members act jointly in approving some settlements and taking enforcement action.
Self-regulatory organizations (SROs) oversee regulated conduct of their members. For example, if the Investment Industry Regulatory Organization of Canada (IIROC) finds that a member has contravened its by-laws, it can impose monetary penalties and suspend or revoke IIROC membership and registration under securities laws. Since its merger with Market Regulation Services (RS), IIROC is also responsible for imposing sanctions for contraventions of the Universal Market Integrity Rules (“UMIRs”), including fines and suspension or restriction of market access. The Mutual Fund Dealers Association of Canada (MFDA) assumes a similar role for members in its sector. It The Chambre de la sécurité financière oversees some securities intermediaries and financial planners in Quebec.
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 RCMP and local and provincial police investigate commercial crimes, including market fraud. The federal government recently established IMET (Integrated Market Enforcement Teams, with combined RCMP and civilian membership) to target major economic crime.
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.