LITIGATION UNLEASHED - Stikeman Elliott

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THE
OSC’S NEW POWERS:
New offences, tougher sanctions
In addition to the creation of the statutory rights of action described above, the amendments
create additional offences under the Securities Act which may be prosecuted by the OSC and
increase the availability of sanctions for non-compliance with the Securities Act.
3.1 Overview of enforcement alternatives
3.1.1 Penalties and disgorgement
In its mandate to enforce requirements of the Securities Act and to protect the integrity of
the capital markets, the OSC has at least three distinct enforcement routes:
• Section 122: gives the Ontario Court of Justice a quasi-criminal jurisdiction to consider
offences under the Securities Act;
• Section 127: the OSC enforcement staff’s most commonly used enforcement route,
which provides an OSC panel with administrative jurisdiction to conduct hearings and
make determinations regarding non-compliance with the Securities Act as well as a variety
of remedies; and
• Section 128: the least-used enforcement route, which allows OSC enforcement staff to
bring a quasi-civil proceeding before the Ontario Court of Justice seeking a declaration
that there has been a breach of securities law.
In addition to the enforcement remedies contained in the Securities Act, the Criminal Code
contains provisions that are available in serious cases to prosecute wrongdoers for such
crimes as conspiracy, market manipulation and fraud. 1
3.1.2 Violations recognized prior to the amendments
Prior to the amendments, s. 122 proceedings could be commenced for the offences of:
• making a materially misleading or untrue statement to the OSC or to staff of the OSC,
• making materially misleading or untrue statements in documents required to be
furnished or filed under Ontario securities law with the OSC, or
• contravening Ontario securities law (the “basket clause”).
Prior to the amendments, s. 127 allowed the OSC to make orders where a person or
company was found to have either:
• failed to comply with Ontario securities law; or
• acted in a manner inconsistent with the public interest (even though he, she or it had
complied with Ontario securities law).
Prior to the amendments, s. 128 allowed the OSC to apply to the Court for a declaration
that a person or company has not, or is not, complying with Ontario securities law.
1
Criminal Code, ss. 380(1), 380(2) and 382.
STIKEMAN ELLIOTT LLP
LITIGATION UNLEASHED
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