The Ontario Securities Commission is expanding its consultation about the proposed introduction of several new enforcement tools, including no-contest settlement agreements.

The OSC said Tuesday that it is both extending the consultation period, and plans to hold a public hearing to consider views on the proposed new enforcement measures. The comment period, which was due to expire Dec. 20, has been extended until Jan. 16, 2012; and the hearing will be held in the new year. The broader consultation is being undertaken, the OSC indicates, “due to the level of public interest” in the proposed initiatives.

Back in October, the OSC proposed to adopt several new tools designed to improve cooperation and speed up enforcement, in an effort to improve the overall productivity of its enforcement efforts. Most controversially, it is considering the introduction of “no-contest settlements”, which would allow firms and individuals facing regulatory allegations to settle their cases without admitting to the facts of the case.

Not requiring admissions of fact could speed up settlements because defendants are reluctant to admit to things that could be used against them in a subsequent lawsuit. If they don’t have to make such admissions they may well settle sooner, however this may also make it tougher for harmed investors to successfully sue.

In the comments submitted so far on the proposals, lawyers that often defend those accused of regulatory wrongdoing are supporting the proposals, whereas those who act for investors, and investor advocates, are opposing them.

Moreover, the OSC’s proposals come at a time when the practice of using no-contest settlements is coming under fire in the U.S., where they have long been a feature of the regulatory system. A federal judge there has thrown out several of these sorts of settlements in the past couple of years, and the U.S. Securities and Exchange Commission recently announced that it will be appealing his most recent rejection of a no-contest settlement, for fear that his decision could imperil the use of these sorts of deals in the future.

The OSC says that its policy hearing will focus on the proposed no-contest settlement proposal, among the various initiatives proposed. Details regarding the hearing, including time and location, will be announced in early 2012, it adds.