Tougher stance urged on Securities Fraud

Canada should take cue from high-profile arrests in the U.S., B.C. official advises

The Globe and Mail
By Patrick Brethour
December 2, 2003

Calgary -- Canadian prosecutors and courts need to take a cue from their U.S. counterparts in cracking down on white-collar crime, says the head of the British Columbia Securities Commission.

BCSC chairman Doug Hyndman said the current culture in Canadian legal circles does not take securities fraud "all that seriously," resulting in white-collar criminals receiving sentences that are too light.

"Stealing money through the market is just as bad as breaking into someone's house," he said after a corporate governance conference in Calgary yesterday. "And people should spend serious time behind bars when they commit serious securities fraud."

By contrast, he said, some Canadian jurists act as if securities fraud is a victimless crime.

Mr. Hyndman said the high-profile arrests of executives in the United States -- the "perp walks" of handcuffed senior officers -- have had a salutary effect on restoring market confidence.

But Mr. Hyndman said eventual convictions are more important than the momentary publicity of an arrest. "Sometimes there's a bit of showmanship in the U.S. that maybe exceeds the actual results at the end of the day," he said.

A fellow securities commission chairman, Stephen Sibold, spoke earlier about progress toward uniform securities legislation between the provinces, which would be a way of harmonizing market rules throughout Canada without creating a single national regulator.

"We will be releasing later this month -- before the end of fall -- our draft legislation," said Mr. Sibold, chairman of the Alberta Securities Commission and of the Canadian Securities Administrators, which represents the provincial and territorial securities regulators.

The Dec. 21 deadline is a slightly more aggressive goal; earlier, a year-end deadline had been set out.

As part of the move to adopt uniform securities legislation, the CSA is aiming to open a permanent administrative secretariat in Montreal, headed by a secretary-general with securities expertise.

Mr. Sibold said the role of the secretary-general would be to co-ordinate the efforts of the various securities commissions in Canada, not to become a de facto national rule-maker.

Mr. Sibold said the CSA's move to adopt uniform securities legislation is not designed to forestall the possibility of a national regulator, saying that such decisions will be made by politicians, not securities commissions chairmen.

"There are some who support USL [uniform securities legislation] because they think it is a first step toward the formation of a national securities commission. There are some who support USL because they think it is a block to, or an answer to, those who support [a national commission]. I'm doing it because I think it is a very practical, achievable and significant way to reform securities legislation."

Mr. Sibold said the goal of the USL approach will be to "keep people inside the fence" of the uniform standards, while allowing individual commissions to react to local circumstances.

British Columbia, however, is already starting to veer from the USL, with proposals to adopt new measures, including a 28-point code of conduct, that do not appear in the harmonized standards.

The conference, hosted by Insight Information Co., continues today.

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