In response to a growing industry emphasis on compliance and enforcement issues, the Nova Scotia Securities Commission is adding muscle to its investigative team. And later this year, its first forensic accountant will be hired, bringing the commission’s total staff complement to 17.

“We have more reporting issuers in Nova Scotia that are Toronto Stock Exchange- and TSX Venture Exchange-listed than the rest of Atlantic Canada combined. We have at least twice as many,” says NSSC chairman Les O’Brien in Halifax. There are about 40 such issuers in total.

A third new investigator will arrive this year, joining two others hired in 2003 and 2004. As well, an in-house staff solicitor was brought on board last year, says O’Brien, a retired securities law professor at Dalhousie University who has been sitting in the NSSC chairman’s seat since 2004.

O’Brien notes that in the past few years the commission has completed more compliance field audits than at any other time in its history. “The effort is more educational than going in and hitting anyone with a two-by-four,” he says. “Our experience has been largely that it’s a matter of making sure people understand what is expected. In the end, this translates into better service for the public.”

O’Brien is already preparing for the next chapter in the commission’s history: the organization’s first full-time investor education specialist. “We need someone who is devoting their energy to this on a daily basis,” he says.

Enhancing investor education, he says, will “probably cut down on the number of calls the director of enforcement gets.”

Updating and upgrading the NSSC’s Web site is another job on O’Brien’s to-do list. The effort is focused on making the site, which, he says, is popular among Nova Scotia investors, more user-friendly and comprehensive.

A new investor education program featured on the site, developed by the Canadian Securities Administrators for use across the country, garners twice as many hits as the same information on security commission sites in Manitoba and Saskatchewan. In comparison with Alberta and British Columbia, the Nova Scotia site comes within a hundred hits.

The number of hits, O’Brien says, is “some proof that the user community today is going to our Web site. That’s the first stop for most users.”

While the commission works to expand staff and services, it remains heavily involved in various national issues with the CSA. “For a small commission, we are very active in the CSA. Our staff is active on committees,” says O’Brien.

Passport model

“We are represented on almost 40 CSA committees,” adds NSSC director Nick Pittas, adding that the “we” refers to a total of 10 employees. Their contributions include grappling with issues such as auditing and acceptable accounting standards to referral arrangements and continuous disclosure.

NSSC staff are working to move the passport model of securities regulation forward. All the provincial ministers except Ontario’s have signed a memorandum of understanding that will move the country closer to harmonized securities legislation. “To the user, it will be a system not dissimilar to that of a single regulator,” says O’Brien. The goal, he says, quoting David Wilson, chairman of the Ontario Securities Commission, is “fair, balanced and efficient legislation.”

The NSSC is also a key player in several programs designed to foster Nova Scotia’s economic development. For instance, it operates the Community Economic Development Investment Fund, a program introduced about six years ago to encourage the development of capital pools within different geographical areas of the province by offering investors a 30% tax credit (see p. 16). The NSSC must review and sign off on all CEDIF requests.

The program has taken off, says O’Brien: “In the past few years, several millions of dollars have been raised.”

And that figure is growing. “Every year we see an increase. It’s a popular program,” says Pittas.

“There is not another commission in the country that is administering this kind of program,” says O’Brien. “It is a program we expect to continue to grow in popularity in the future.” IE