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“Unprecedented” new powers coming to the B.C. Securities Commission

by Greg Klein | March 10, 2020

Fraudsters should find British Columbia a less attractive place to do business as tougher new regulatory measures take hold. The most extensive Securities Act overhaul since B.C. enacted the legislation in 1996 brings over a hundred new measures to broaden and strengthen powers of the B.C. Securities Commission. Taking effect March 27, the revised act expands the types of misconduct the BCSC regulates, enhances its ability to freeze assets, strengthens its power to collect sanctions and imposes stronger penalties for misconduct. Some of the measures will be unique to B.C.

“Unprecedented” new powers coming to the B.C. Securities Commission

Calling it “a new era of investor protection in this province,” BCSC CEO/chairperson Brenda Leong said, “These changes give us powerful new tools to help us collect money from wrongdoers and return funds to victims.”

Among new powers that are unprecedented in Canada are mandatory minimum jail sentences for certain types of fraud, heavier penalties for certain types of misconduct, new prohibitions on false or misleading statements and tighter rules regarding promotional activities, the commission stated.

BCSC staff will gain new powers of investigation and enforcement. In addition to mandatory minimums, scammers face maximum penalties increased to $5 million in fines and five years in prison. They’ll find it harder to evade enforcement by moving assets out of the province or transferring them to third parties. RRSPs are now included among assets the commission can seize. The agency can also prevent miscreants from getting vehicle plates or renewing driver’s licences.

Promoters will face sanctions for omission of important details, as well as for false or misleading statements.

Victims should find a greater likelihood of compensation not only with enhanced enforcement but a more flexible claims process. Whistleblowers will get protection against retribution.

The amendments also introduce a regimen for derivatives and benchmarks that will be harmonized with some other Canadian jurisdictions.   

The enforcement powers in particular may have been motivated by a series of stories by Postmedia journalist Gordon Hoekstra. In 2017 he reported several cases of sanctions remaining unenforced despite significant assets held by wrongdoers. Over the previous decade the BCSC collected less than 2% of $510 million in fines and payback orders, while the Ontario Securities Commission enforced about 18% of its penalties, Hoekstra wrote.

“Immediately after the Postmedia investigation, the BCSC filed at least 10 writs of seizure and sale in B.C. Supreme Court for financial fraudsters owing nearly $70 million in penalties, and renewed three enforcement orders,” Hoekstra reported in June 2018. “Also following the investigation, B.C. Finance Minister Carole James ordered the BCSC to improve its collection record and called for new tools and modernization of the Securities Act to improve collection.”

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