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BC Securities Commission
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BCSC adds no-hearing penalties to its arsenal

2023-04-27 12:31 ET - News Release

Caswell Subject: *BCSC Word Document File: '\\swfile\EmailIn\20230427 091359 Attachment bcsc_nr.docx' BCSC launches a new streamlined enforcement tool Vancouver - The B.C. Securities Commission (BCSC) will begin imposing administrative penalties for less serious violations of investment market rules without holding a hearing before a panel of commissioners. The BCSC's Executive Director will use Administrative Penalties Imposed by Notice (APIN) for violations of regulations or previous decisions of the Commission or Executive Director. The APIN procedure will not be used for misconduct that is prohibited by the Securities Act. When misconduct requires a higher penalty or additional orders, such as bans or restrictions on market participation or repayment of illicit proceeds, the Executive Director will continue to seek orders from the Commission through a panel hearing. The maximum APIN penalty is $100,000 per violation for individuals and $500,000 per violation for entities, such as companies. (For violations that are adjudicated through panel hearings, the maximum penalty is usually $1 million per violation.) The amount of the administrative penalty imposed by notice will depend on the specific facts and circumstances of each particular contravention. The Executive Director will consider all relevant factors, including the person's past conduct, the seriousness of the conduct, mitigating factors, and the need to deter those who participate in the capital markets from engaging in inappropriate conduct. The power to impose administrative penalties without a panel hearing is one of several new powers given to the BCSC in 2020 through amendments to the Act. The BCSC is the only Canadian securities regulator to have this power. "Using this power, the BCSC will be able to quickly respond to less serious contraventions with a streamlined process," said Doug Muir, the BCSC's Director of Enforcement. This is how the APIN program will work: If BCSC staff detect an applicable violation, they may submit a report to the Executive Director describing the alleged violation, as well any facts that may call into question or mitigate the violation, and recommend a penalty. If the Executive Director believes a violation occurred and a penalty is warranted, a written notice will be delivered to the person or entity, specifying each violation, the penalty for each violation and the date by which the penalty must be paid or disputed. If the party doesn't dispute the notice, the Executive Director will make it public. If a person or entity disputes the violations or penalty, the Executive Director will consider their challenge and issue an order confirming or revising the notice. If a penalty is imposed, it will be made public. Affected parties would then be able to request that the Commission conduct a hearing and review of the Executive Director's decision. As with other panel decisions, the affected party could appeal to the B.C. Court of Appeal. The BCSC has a range of tools for encouraging compliance with B.C. securities laws. It can send inquiry letters or caution letters, add a person or entity to its Investment Caution List, add an issuer to the Default List, issue a Halt Trade Order, Cease Trade Order or investor alert, or impose conditions on, suspend or revoke someone's registration. It can also ask a panel to hear allegations of misconduct and if warranted, impose market-related bans and financial sanctions. Imposing administrative penalties by notice is another enforcement tool the Executive Director may use to encourage compliance, enabling the Executive Director to efficiently and effectively respond to contraventions where it is not in the public interest to seek larger sanctions and bans, but something more than a warning is required to encourage future compliance. Where misconduct requires more than a monetary penalty to protect the market and investors from ongoing and future harm - bans or restrictions on market participation, disgorgement of illicit proceeds, or required actions to effect compliance - the Executive Director will continue to seek orders from the Commission under section 161 of the Act after a hearing. About the B.C. Securities Commission (www.bcsc.bc.ca) The B.C. Securities Commission is the independent provincial government agency responsible for regulating capital markets in British Columbia through the administration of the Securities Act. Our mission is to protect and promote the public interest by fostering: A securities market that is fair and warrants public confidence A dynamic and competitive securities industry that provides investment opportunities and access to capital Media Contact: Brian Kladko 604-899-6713 Public inquiries: 604-899-6854 or 1-800-373-6393 (toll free) inquiries@bcsc.bc.ca