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Norm Keith: Canada securities regulators fail to collect $1 billion in penalties

A recent investigative report has fueled fears that Canada’s poor track record collecting penalties for securities law violations is contributing to the country becoming a haven for securities fraudsters, capital markets corruption, and other misconduct.

Two reporters at the Globe & Mail newspaper — Grant Robertson and Tom Cardoso — estimate the amount of uncollected fines and financial penalties to be in the range of $1.1 billion.

The massive figure demonstrates how sanctions imposed by the Ontario Securities Commission, the British Columbia Securities Commission, and other provincial securities commissions across Canada have failed to effectively to enforce the country’s securities laws.

The availability of the data through the investigative reporting is seen as highly embarrassing to the provincial-level securities commissions.

While a polar vortex grips Canada in an extremely cold winter, one is led to ponder whether the billion dollars of unpaid securities, fines and penalties have been frozen in the valley of bureaucratic good intention?

As the investigative reporters note, “a billion dollars would be more than enough to pump badly needed funds into the budgets for white-collar criminal investigations across Canada, or even return some losses to investors who the regulators are mandated to protect — if only that money were being collected.”

The collection shortfall may be a further reason for the federal government to reignite its past efforts to establish a national securities regulator. Canada is the only major world economy without one.

Canada also doesn’t have a national white-collar crime prevention strategy, and no national deferred prosecution agreement system. So unpaid fines may represent a further reason to discourage corporations and individuals from reporting violations and improving corporate compliance.

Canada’s provincial securities commissions certainly are leaders in promoting gender equality and “say on pay” for boards of public companies, but apparently less interested in or less capable of collecting fines that have been imposed for unlawful securities market activities.

When it comes to getting the basics of securities regulation right, and simply enforcing existing security laws, the Canadian record is skating on very thin ice.


Norm Keith, pictured above, is a partner in Fasken’s Toronto office. He’s on the White Collar Crime Committee of the Criminal Justice Section of the American Bar Association. Among the books on the subject he has authored are Corporate Crime, Accountability and Social Responsibility in Canada (2nd ed.), Insider Trading in Canada (2nd ed.) and Canadian Anti-Corruption Law and Compliance (2nd ed.). He can be reached at 416-868-7824 or at [email protected].

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