The Ontario Securities Commission is calling on legislators to give police more power to crack down on financial crime.

Speaking to an Economic Club of Toronto luncheon on Wednesday, OSC chair David Wilson said, “it’s time to carefully study the idea of giving police some new, but very carefully circumscribed powers to investigate economic crime.”

Without a more integrated system between the regulators — the SROs and the legal community — enforcing penalties against rogue advisors or financial institutions is that much more difficult. “When a possible case has surfaced, who takes it?” he asks. “It would seem to me a more coordinated approach to case assessment and channeling cases to where they best belong. It needs a coordinated framework, which doesn’t exist right now in a rigorous way.”

One area that regulators and lawmakers need to sort out involves third-party witnesses. As it stands, Canadian police can’t force people to testify during an investigation if they are not charged with an offence, even though they might have information that could help law enforcement.

Wilson says securities regulators do have that power, but they’re “severely constrained from providing police with information we gather using these powers.

“I can’t emphasize enough the profound distinctions between regulatory law and the different rules, procedures, penalties and burden of proof as contrasted with criminal law,” he says.

Clearly articulating the differences between misconduct requiring a regulatory response and misconduct requiring a criminal response is something Wilson would like to improve on. And, he says, “in the next few months the OSC will be doing just that.”

If the OSC wanted, it could take a matter to court. Wilson explains that the regulatory body has the statutory authority to take enforcement proceedings to court.

“It’s a power used in a relatively small minority of cases,” he says, “cases of severe wrongdoing. We go to the courts and seek jail sentences to punish offenders, and to send a strong message of deterrence.”

But giving police more power, or giving the OSC or other regulators the power to take people to court, is just part of the solution to the ongoing criticism that the OSC isn’t tough enough on white-collar crime. Once again, Wilson calls on the financial community to adopt a single securities regulator.

“There is no doubt that a common securities regulator would improve enforcement in Canada,” he says, adding that it’s up to the government now to make the next move.

Will the government take action? Wilson’s hopeful. “It’s been talked about for 40 years, so is it realistic it’ll change sometime? I’m an optimist and I think at some point the stars will align and the right decisions will get made by the right politicians to do it. Every other country in the world is structured that way; I don’t think Canada should stay different forever.”

Filed by Bryan Borzykowski, Advisor.ca, bryan.borzykowski@advisor.rogers.com

(04/16/08)