Analysis
Longtime director of enforcement Tom Atkinson is leaving the Ontario Securities Commission, the securities regulator revealed Wednesday.
While the move was not surprising considering that rumours of Atkinson’s proceed to the Securities and Futures Commission of Hong Kong continues to be on offer in regulatory and legal circles, his departure is raising another issue that has been hanging within the OSC for months: the pending creation of a co-operative federal-provincial securities regulator is making the OSC a less appealing landing location for talented employees.
“The problem – would be that the co-operative regulator might come into operation at some indeterminate point, why invest in a situation with limited future prospects,” said one seasoned securities lawyer.
An interim alternative to Atkinson wasn’t immediately named, and it is expected only in “the coming weeks,” according to an early-morning news release in the OSC.
The veteran lawyer said the OSC is facing exactly the same dilemma using the position of executive director, which hasn’t been filled since Maureen Jensen became chair of the OSC following the departure of Howard Wetston, who left the commission in November.
The short horizon is not the only complicating factor. After fifty years of attempting to unite Canada’s disparate patchwork of provincial and territorial regulators, great pains are being taken to ensure participating jurisdictions don’t believe that players or perhaps precedents from Ontario, the nation’s biggest and busiest capital market, dominate the new watchdog.
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As an effect, it could be argued that anyone who requires a senior job at the OSC must be either inside it for a while – or ambitious and assured enough to consider they can grab a senior position among the fewer seats in the combined national-provincial regulator despite their berth at the OSC.
“There will be a scramble for all those positions,” the veteran securities lawyer said.
Industry sources say top contenders for that director of enforcement job in the OSC – if they’re willing – are Karen Manarin and Katie Daniels. Manarin is a lawyer and deputy director of enforcement, and Daniels worked in enforcement before moving to her job as deputy director of corporate finance.
The uncertainty about the timeline to do the job might “put people off,” particularly potential candidates away from commission, said a former regulator, who spoke given that he ‘t be named.
The politics at the office round the OSC and also the formation of the new co-operative regulator are visible in the current career trajectory of vice-chair Monica Kowal, who had been briefly acting chair from the OSC after Wetston’s departure but who didn’t get the top job. That went to Jensen, 59, who had been appointed for a two-year term, that was viewed as non-threatening to efforts to bring provinces outside Ontario into the fold of the co-operative regulator.
So far, Ottawa, the Yukon, and five provinces including Ontario and Bc, have committed to the Cooperative Capital Markets Regulatory System.
The official timeline suggested the new regulator could be operational within the fall of 2016, but there have been delays and industry players say a two-year timeline is much more realistic.
In the meantime, some market watchers don’t expect a lot will be performed to enhance the OSC’s spotty enforcement record.
Despite key wins, like a contested insider trading case against former GMP Securities executive assistant Eda Marie Agueci, there have been noteworthy losses, such as the complete exoneration of Jowdat Waheed and Bruce Walter, who faced insider-trading allegations related to the takeover of Baffinland Iron Mines Corp.
Why invest in a situation with limited potential customers?
And while it is well-known the wheels of justice can grind slowly, allegations from the principals behind Sino-Forest Corp. still wind their way with the OSC hearing process nearly five years after the disgraced timber company’s high-profile collapse amid fraud allegations.
Like other Canadian regulators, the OSC has also struggled to gather the financial penalties and disgorgement orders it imposes – even while those sanctions have grown. Last year, for instance, the OSC’s collection rate only agreed to be 14.16 per cent, based on a recent note written by Trevor Courtis and Rene Sorell at law firm McCarthy Ttrault LLP.
Despite the record, observers the OSC devoted significant resources to cracking down on market malfeasance under Wetston, who became chair in 2010, and Atkinson, who had been named director of enforcement in 2009.
During their tenure, the OSC established some pot Serious Offences Team (JSOT) that combines securities regulators and police to pursue criminal and quasi-criminal cases. The pair also presided within the introduction of two Canadian firsts in securities enforcement: no-contest settlements, and a proposed whistleblower program bolstered through the commitment of financial rewards for solid information.
Financial Post
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