The Alberta Court of Appeal has rejected a constitutional challenge to the Alberta Securities Commission’s (ASC) investigative powers, upholding the regulator’s ability to collect and share information with other authorities.
The court dismissed an application from Scott Gerard Beaudette, which challenged the constitutionality of certain provisions of securities law in Alberta on the grounds that the ASC’s ability to compel evidence, and its power to share information with other regulators, such as the U.S. Securities and Exchange Commission (SEC), violates his rights under Canada’s Charter of Rights and Freedoms.
According to the decision, Beaudette argued that the ASC is effectively working with U.S. authorities to facilitate a possible criminal prosecution in the U.S.; the ASC may co-operate with U.S. authorities in the future, without notice to him; and that the ASC should be prevented from doing that in advance.
“He contends that, not only is the statutory authority of the ASC to require such information and documents with the possibility of sharing it unconstitutional, but so is the ASC agents’ conduct in invoking that authority against him here,” the decision notes.
The court acknowledges that there is a balance to be struck between the right to avoid self-incrimination and the regulators’ ability to investigate and share information. However, the court’s decision notes that a lower court ruled that the predominant purpose of the ASC’s investigation orders was not to carry out a criminal prosecution. In addition, the court’s decision says that the fact that information might be useful in a foreign court doesn’t necessarily amount to a Charter violation.
The court’s decision also says that the ASC could not meet the objectives of securities regulation — such as protecting investors, facilitating capital market efficiency and ensuring public confidence in the capital markets — without having the power to investigate and compel information. The sharing of information between regulators is also “an indispensable aspect” of regulation, the decision notes.
Beaudette also argued that other provincial regulators have stronger protections when sharing information — namely that they must provide notice to the subject of an investigation before sharing information, the decision says.
“To be sure, a requirement of notice to the appellant by the executive director before acting … might arguably put the appellant into a position of seeking judicial review of such a decision,” the court’s decision says. However, the court found that this “is not the equivalent of saying that the appellant has a Charter right to bar transfer of the information gathered by the ASC to the SEC.”
Ultimately, the court concluded that Beaudette failed to make his case that the securities law provisions amount to a violation of his Charter rights. It dismissed his application.
“The court’s decision to uphold these legislative powers is critical to our continued ability to co-operate with other agencies in delivering effective investigations,” says Cynthia Campbell, the ASC’s director of enforcement, in a statement following the ruling. “It should be understood that, when appropriate, these powers can and will be used to protect investors and the Alberta capital market.”