Quebec’s financial regulator won a small but welcome victory earlier this month in its battle to prove it can credibly respond to a wave of financial scandals that has hit the province.

The Autorité des marchés financiers succeeded in blocking Vincent Lacroix, chief executive of Norbourg Asset Management Inc. , from gaining partial access to his personal assets. Lacroix’s assets have been frozen since last summer, when the AMF and the RCMP moved in to close down Norbourg. The AMF later alleged that Lacroix misappropriated $84 million from the group’s mutual funds.

Norbourg is just one front on which the AMF is fighting these days. The list also includes hedge-fund operator Norshield Financial Group and the related Mount Real Corp. , both of which blew up last year, costing investors hundreds of millions of dollars.

The AMF has come under heavy fire for missing or ignoring red flags in these cases, leading to increased pressure from the Montreal financial industry and media for Quebec to support a national securities regulator.

The Quebec government is staunchly opposed. But Ontario recently upped the ante in its campaign for a national regulator with a report that, among other recommendations, left the door open to locating the headquarters of a proposed Canadian Securities Commission in Montreal. It also tried to the allay fears of Quebec, Alberta and British Columbia that a national regulator would be Ontario-dominated by giving the provinces, territories and federal government equal voices in its operation.

From the AMF’s start in February 2004, it has been unique among Canadian regulators. Modelled on the French agency of the same name, it brought under a single roof work previously performed by five provincial agencies supervising the securities, mutual fund, insurance and deposit-taking subsectors.

Jean St-Gelais, the head of the AMF, was closely involved in the creation of the agency under the former Parti Québécois government. At the time, he was the government’s top bureaucrat under former premier Bernard Landry. An economist by training, St-Gelais has no experience working in the financial industry. A source of irritation for the Montreal industry is the fact he continues to live in Quebec City and spends a large chunk of his week there.

Many in Quebec’s financial industry remember St-Gelais’ role in two ill-fated attempts by the PQ government to impose its will on Canada’s capital markets. In 1999, Landry — then finance minister, with St-Gelais as his assistant deputy minister — tried to force Canada’s stock exchanges to reopen a reorganization plan that sent ownership of the Montreal Exchange’s stock listings to the Toronto-based TSX Group Inc.

When that effort failed, the PQ tried in 2000 to bring a Nasdaq-sponsored exchange to Canada that would, in theory, create a powerful Montreal-based competitor to the TSX. After limping along for a few years, the Nasdaq Canada project was quietly laid to rest in 2004.

St-Gelais has argued against the need for a national securities regulator. But pressure for such a regulator is strong from Ontario, Ottawa and influential players in Quebec, such as billionaire investment counsellor Stephen Jarislowsky.

St-Gelais has a lot to prove at the AMF, given the tough cases that have piled up. He’ll be fighting over the next year to establish the AMF’s credibility and, perhaps, for its very survival as an independent regulator. IE