The Ontario Legislative Assembly's Standing Committee on Government Agencies (the "Committee") released a 37-page report (the "Report") on the Ontario Securities Commission, based on its review of the OSC in late 2008 and early 2009.
The Report provides an insightful analysis into the role of the securities commission and key investor protection issues. While the Report is being published a number of months later than expected, it was well worth the wait. We encourage everyone with an interest in securities regulation and investor protection in Canada to read the Report.
The OSC made presentations to the Committee on December 2, 2008 and February 23, 2009. Stakeholders presentations were made on February 23, 2009 and the OSC returned on April 7, 2009 to respond to the presentations. FAIR Canada filed a submission with the Committee and made a presentation. (The links to the transcripts of the Committee meetings are highlighted in the paragraph.)
Public Interest Jurisdiction and Accountability
The Report acknowledged steps taken by the OSC in response to the financial crisis, but was critical of its low visibility in protecting investor rights, including in the ABCP crisis.
In considering this very complex issue, it is obviously not the role of this Committee to second-guess decisions relating to the technical aspects of the securities regulation...
More generally, however, we believe it is appropriate to comment on the Commission's general mandate to protect the public interest. In particular, we believe it is important that the agency charged with protecting the public interest be seen to be taking a leadership role when there is a major disturbance in the markets that threatens the interests of retail investors. In this respect, we have some concern that the Commission may have adopted a narrow interpretation of its public interest jurisdiction in responding to the ABCP crisis. (Page 10 of Report)
In its first recommendation, the Committee called on the OSC to "reassess the way in which it exercises its public interest jurisdiction, with a view to improving the Commission's effectiveness and accountability." The second recommendation called on the Ontario Ministry of Finance to review the statutory scope of the OSC's public interest jurisdiction. The Committee also called for more effective parliamentary oversight of the OSC.
Retail Investor Input
In a section entitled "Investor Protection", the Committee agreed with FAIR Canada and other investor advocates that the OSC should: (a) establish an investor advisory body along the lines of the U.K. Financial Services Consumer Panel, and (b) to appoint a commissioner who would bring a better understanding of the retail investor perspective to the OSC's Board of Directors.
The Committee agreed with the FAIR Canada submission that the appointment of a commissioner with a greater understanding of retail investor issues would not conflict with the OSC charter and was no different than the OSC reserving a position on the Commission's board for an individual from a listed company.
Click here to read full story and recommendations in the Report.
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