The Capital Markets Tribunal has the authority to impose a range of sanctions on individuals and companies for violations of securities law, commodity futures law or conduct that is contrary to the public interest in Ontario. Adjudicative panels made up of Adjudicators appointed to the Capital Markets Tribunal may make orders imposing sanctions following a hearing. (In certain circumstances, the Ontario Securities Commission (OSC) also has the authority to impose a subset of non-monetary sanctions on individuals and companies on consent, for violations of securities or commodity futures law, or for failure to meet certain filing requirements.)
Under Ontario’s Securities Act and Commodity Futures Act, the Capital Markets Tribunal has the authority to make orders where they are deemed to be in the public interest and are consistent with the purposes of the Act, including the protection of investors from unfair, improper or fraudulent practices, the fostering of fair, efficient and competitive capital markets and confidence in the capital markets, and to contribute to the financial system and the reduction of systemic risk.
Types of sanctions imposed by the Capital Markets Tribunal
A conduct ban is a temporary or permanent ban on the conduct of an individual, such as trading bans, bans against acting as a director or officer of a public company, and acting as or becoming a registrant in Ontario. Conduct bans restrict an individual’s activity in the capital markets or may ban them from the markets entirely.
The Capital Markets Tribunal can impose two kinds of monetary sanctions where there has been non-compliance with securities law: administrative penalties and disgorgement orders. Both of these types of orders are intended to serve deterrent purposes.
In imposing administrative penalties, the Capital Markets Tribunal may order a person or company found to have breached securities law to pay up to $1 million for each failure to comply.
Disgorgement orders require the respondent to pay any amounts that they have obtained as a result of their non-compliance with securities law. The amount of a disgorgement order depends on the circumstances of each proceeding.
The Capital Markets Tribunal will consider the amount of monetary sanctions to impose as is appropriate in the circumstances and based on several factors. These factors may include the seriousness of the misconduct, the impact on investors, and the message of deterrence it may send, irrespective of a respondent’s ability to pay.
The OSC may seek orders from the Capital Markets Tribunal that extend the length of time a conduct ban is in effect until monetary sanctions have been paid in full.
The Capital Markets Tribunal can also order a respondent to pay the costs of an investigation and/or hearing.
How are monetary sanctions enforced in Ontario?
The OSC makes every reasonable effort to enforce Capital Markets Tribunal orders, including collecting unpaid monetary sanctions and costs.
Capital Markets Tribunal orders are routinely filed in the Superior Court of Justice. Under securities and commodity futures law, Capital Markets Tribunal orders then become enforceable as though they are court orders. This allows the OSC to use a range of creditor remedies to collect amounts owing, which can include garnishment, seizure and sale of property, and registering liens. The OSC uses a specialized collections law firm to assist in recovery and may commence legal proceedings to recover amounts owing.
Unpaid monetary sanctions
When monetary sanctions are unpaid, it threatens the confidence people have in our markets and weakens the value these orders have in deterring wrongful conduct. The OSC makes considerable efforts to collect outstanding amounts, to preserve assets and protect investor funds. The OSC utilizes a range of collections tools and strategies and may take additional legal action to try to collect any amounts owing.
For information on sanctions ordered and collection rates, please refer to the OSC Annual Report.
The “Delinquent Respondent List” provides information on individuals or organizations who continue to owe some or all of the disgorgement amounts, administrative penalties, or costs ordered against them.