The federal government on Thursday announced new measures to strengthen enforcement and legislation against serious capital markets fraud. Ottawa says it will spend up to $120 million over the next five years.

The measures were previously outlined in the 2003 federal budget.

As a means to better coordinate and strengthen enforcement against capital markets fraud, Wayne Easter, Solicitor General of Canada announced the creation of six Integrated Market Enforcement Teams (IMETs) made up of RCMP investigators, federal lawyers and other investigative experts dedicated solely to capital markets fraud cases.

These teams will enhance efforts to track down corporate criminals, and deter future occurrences of these crimes. According to the federal government, the integrated, coordinated approach being taken — the defining feature of the IMETs — will help strengthen enforcement action in Canada.

The IMETs will be located in Toronto, Vancouver, Montreal and Calgary. Two teams in Toronto and one in Vancouver will be established by March 31, 2004, with the remaining teams to be created within the following year.

“The Government of Canada takes corporate fraud seriously and we are committed to deterring criminal activity in Canada’s capital markets,” said Easter. “We are already working with the provinces, regulators, law enforcement and industry to ensure the integrity of Canada’s financial markets. These dedicated, RCMP-led teams will make certain that this work not only continues, but is strengthened.”

Proposed legislative amendments, introduced by Martin Cauchon, Minister of Justice and Attorney General of Canada, in the House of Commons Thursday, would tackle capital markets fraud by:

  • creating a new Criminal Code offence of improper insider trading;
  • protecting employees who report unlawful conduct within their corporation from retaliation by creating a new employment-related intimidation offence; and
  • raising maximum sentences for existing fraud offences and establishing aggravating factors to assist the courts in determining a sentence that reflects the seriousness of the crime.



The proposed amendments would also enhance the evidence-gathering tools available to investigators by adding production orders, with appropriate safeguards, to the Criminal Code. Investigators could obtain pertinent documents or data from third parties (those not under investigation) within a specified time period. While these orders would prove particularly useful in cases of capital markets fraud, they would apply to all criminal offences.

To complement the existing provincial jurisdiction for prosecutions, federal jurisdiction would be permitted, under the proposed reforms, to prosecute a narrow range of cases that threaten the national interest in the integrity of capital markets.

Ottawa says concurrent jurisdiction would increase the amount of resources available to tackle capital markets fraud cases.


http://canada.justice.gc.ca/en/news/nr/2003/doc_30926.html