OSC seeks power to regulate professionals

The Ontario Securities Commission has recently proposed a series of far-reaching amendments to the Securities Act that would broaden its investigation and enforcement powers to include mining engineers and other professionals. Among the more controversial of the OSC’s proposed amendments are those that would authorize it to reprimand engineers, consultants, lawyers and accountants, who through misconduct or negligence, contravene the Act.

The OSC report recommends the Act recognize that individuals other than officers and directors of companies may be responsible for breaches of the Act, and should be held accountable. These individuals include professionals such as lawyers, accountants and engineers who authorize, counsel or participate in a breach or misconduct.

“These professionals are considered the gate-keepers of the whole system,” said Selwyn Kossuth, the OSC’s executive director.

“The Securities Act must be amended for the commission to effectively carry out its job of regulating the market,” he said. “The capital markets have changed considerably, and the commission’s capacity to regulate has not kept pace.”

The OSC is seeking a broadening of its authority through a wider range of disciplinary powers. Existing sections 122-124 of the Act would be replaced, for example, giving the OSC powers of the following nature:

* to order a reprimand of a person, including a lawyer, an accountant, an engineer, or any professional, for misconduct in the marketplace.

* to order a person — including a lawyer, an accountant, an engineer or any professional — found to have engaged in misconduct in the marketplace not to hold office in, or be a director of, or be employed or retained by, any registrant or reporting issuer.

* to order the surrender of any unlawfully obtained gains.

* to order a person to pay costs associated with any investigation or proceeding before the OSC.

“While the commission’s remedial powers are in the public interest, staff recognize that these proposals may be controversial,” says the OSC report. “In particular, professionals and their governing bodies may be concerned with the proposed power to reprimand and deny office, employment or retention, since it would reach lawyers, accountants, engineers, valuators and other professionals.”

Sources contacted by The Northern Miner said they were aware new changes to the Act were coming, but they added it was still too early to know what overall effect the proposed amendments might have.

Other jurisdictions including British Columbia, Alberta and the U.S. have already made similar legislative changes recognizing the “new realities in enforcement,” says the report.

The 20-page document of amendments, released in Toronto last week, is being circulated for comment. Any issues and concerns raised by the paper should be sent to the secretary of the OSC by mid-April.