The Ontario Securities Commission (OSC) enforces compliance with the provisions of Ontario’s Securities Act and Commodity Futures Act. Specifically, the OSC works to protect investors, foster fair and efficient markets, and contribute to the stability of the financial system by monitoring compliance with rules governing the capital markets in Ontario.
Ontario Court of Justice
Section 122 of Ontario’s Securities Act and section 55 of Ontario’s Commodity Futures Act give OSC Staff the authority to lay quasi-criminal charges and prosecute alleged wrongdoers through the Ontario Court of Justice. These court proceedings are instrumental in deterring misconduct. In addition, OSC Staff may apply directly to the Ontario Superior Court of Justice under section 128 of Ontario’s Securities Act for a declaration that a person or company has not complied with or is not complying with Ontario securities law.
The OSC participates at all levels of court in Ontario and Canada on securities-related matters.
Cease trade and freeze orders
A cease trade order (CTO) is an order made by a securities regulator requiring that trading in securities by a person or company be prohibited permanently or for a specified period of time. Freeze orders are court orders that prevent a person or company from disposing of or moving funds held in bank or brokerage accounts.
Investor alerts and warnings
As part of its enforcement activities, if the OSC identifies individuals or companies where potentially harmful securities-related activity is in progress, it will issue an investor alert to the media for immediate distribution. If the individuals or companies appear to be engaging in activities that may pose a risk to investors, it will issue an investor warning. See all investor warnings and alerts.
Generally speaking, the term receivership describes a process whereby a court appoints a third party, referred to as a receiver, to manage or otherwise oversee the business or assets of another individual or company. In the case of the OSC, it may apply to the Superior Court of Justice of Ontario under section 129 of Ontario’s Securities Act for an order appointing a receiver (or a receiver and manager, trustee or liquidator) to broadly manage all, or a part, of the property of any person or company.
To grant the order, the court must be satisfied that one of the following conditions have been met:
- the appointment is in the best interests of certain parties including the creditors or the investors; or
- it is appropriate for the due administration of Ontario securities law
The OSC may apply for the appointment of a receiver at the same time an investigation order is made, during the course of an investigation, or after the completion of an investigation. If the court appoints a receiver, the directors of the affected corporation may not exercise any of their powers until the receiver is discharged by the Court.
Settlements of enforcement matters
Settlements can result in effective and timely protection of investors and more rapid restoration of confidence in the capital markets.
Credit for cooperation program
In March 2014, the OSC issued OSC Staff Notice 15-702 – Revised Credit for Cooperation Program. During the course of an enforcement investigation, OSC Staff may give credit to a person or company if they cooperate during the course of an investigation. This includes self-policing, self-reporting and self-correcting potential violations of Ontario securities law.
Disciplined persons and companies
The Canadian Securities Administrators (CSA) maintains a list of disciplined persons and companies from several government agencies responsible for protecting investors and the integrity of the securities markets, including the OSC. Not all disciplinary actions are contained on this list. The OSC information on this list dates back to 1997.
The mediation program, which became a permanent OSC resource in 2018, provides respondents in OSC enforcement proceedings and OSC Staff with an option to seek a resolution through a neutral third-party mediator, the cost of which is shared by the parties. Mediations are confidential and privileged. The mediator can assist with facilitating the negotiation of settlement terms, determining an Agreed Statement of Facts, and resolving other issues between the parties.
Sanctions, which are orders for violations of securities law or conduct that is contrary to the public interest, are imposed either at the conclusion of a contested proceeding or as part of a settlement reached between the respondent and OSC staff and approved by the Commission. Sanctions are intended to deter future wrongdoing in the capital markets.
The OSC’s Whistleblower Program encourages individuals to come forward with information about possible violations of Ontario securities law that have occurred, are ongoing, or are about to occur. The program offers whistleblowers confidentiality, the option to report anonymously and anti-reprisal measures. Whistleblowers who meet certain criteria may be eligible for a financial reward. Information obtained through the program contributes to timely, open and efficient administration and enforcement of Ontario’s Securities Act and Commodity Futures Act.