The 小蓝视频 Securities Commission (小蓝视频SC) will now fine individuals and entities believed to have committed minor violations of public investment rules without first proceeding to an independent panel of adjudicators.
“Using this power, the 小蓝视频SC will be able to quickly respond to less serious contraventions with a streamlined process,” said 小蓝视频SC's director of enforcement Doug Muir.
Before the change, announced by the commission April 27, if the 小蓝视频SC executive director had reason to believe a violation occurred, the commission would have to take its case to a hearing panel.
But now, as part of a suite of amendments to the 小蓝视频 Securities Act in 2020, the commission can itself determine if a violation occurred and file a penalty (up to $100,000 per violation for individuals and $500,000 per violation for entities) against the violator, be it a stock promoter, consultant, company employee or corporate entity.
The process will not apply to more serious violations, particularly when they require higher penalties and additional orders such as bans or restrictions on market participation, stated the commission in its news release.
The process is being called Administrative Penalties Imposed by Notice (APIN) and works as follows:
First, 小蓝视频SC staff detect a possible violation and submit a report to the executive director, who makes the final call.
Next, the violator will be notified and can either pay the fine or dispute it. If a violator disputes the violations or penalty, the executive director “will consider their challenge and issue an order confirming or revising the notice,” according to the commission.
Should the violator still dispute the violation, as alleged or the penalty, they may request a hearing panel to review the executive director’s final decision. At this point, the process becomes as like a typical hearing process that can eventually be appealed to the 小蓝视频 Court of Appeal.
“Imposing administrative penalties by notice is another enforcement tool the Executive Director may use to encourage compliance, enabling the Executive Director to efficiently and effectively respond to contraventions where it is not in the public interest to seek larger sanctions and bans, but something more than a warning is required to encourage future compliance,” states the commission.
The APIN regime is the first of its kind among Canadian securities regulators and is part of a suite of other recent changes intended to beef up enforcement of the act.
The commission was given new powers in March 2020, including:
- mandatory minimum jail sentences for certain types of fraud;
- increased penalties for certain types of misconduct;
- new prohibitions on false or misleading statements; and,
- tighter rules around promotional activities.
Some specific changes imposed since then include automatic reciprocal orders from other provincial regulators and a more flexible claims process for repayments to defrauded investors. The commission has also imposed a new arrangement to revoke a fraudster’s driver’s licence should they not repay their penalties.
