Securities fraudsters are facing a greater chance of jail time, not just a regulatory hearing, says the head of the British Columbia Securities Commission (BCSC).
In a speech to the Vancouver Board of Trade on Tuesday, Brenda Leong, chairwoman and CEO of the BCSC, highlighted the commission’s resolve to take more cases before criminal courts, which is one of the ways that it aims to bolster market confidence.
Leong reported that, since 2007, when the commission formed a criminal enforcement team, Crown counsel have laid 346 charges in connection with 26 cases, 27 people have been formally charged, and 10 of them have been convicted so far.
In the first two years of the team’s operation, 12 cases were opened, and five of those resulted charges (16 counts under the Criminal Code and the Securities Act). In all but one of those cases, the individuals charged have either pleaded guilty or been convicted at trial and received jail terms of up to 12 months, she said.
The BCSC’s efforts have been gathering momentum since then, she reported. Leong said that in 2009-2010, the BCSC opened 17 criminal cases, and, since the beginning of 2011, another 21 cases have been opened.
“Our goal is to bring more and more cases before the commission and the courts to send strong deterrence messages,” she said.
In terms of its own hearings, Leong said that the BCSC has improved the efficiency of its administrative enforcement practices, which has resulted in “more cases being handled with the same resources. In addition, many cases are being dealt with significantly faster,” she said.
Along with enforcement, she notes that it is also trying to foster confidence through improved investor education, and tightening regulation in certain areas, such as the exempt market. Leong said that given the growth in private placement financing, “we have strengthened oversight of this market to provide more effective protection to those who choose to invest in these private start-ups.”
“In this post crisis environment, we are also mindful of increased investor vulnerability to what may appear to be attractive investment opportunities,” she said.
At the same time, she stressed that the BCSC is mindful of the regulatory burden that can accompany efforts to enhance confidence. “A sense of urgency is appropriate in the early stages of any crisis. And regulators must be open to the idea that at least part of the problem could be rooted in a regulatory failure,” she says. “But guessing wrong — intruding when not necessary, and imposing costly and burdensome requirements — can easily cause serious and lasting damage to markets.”