Securities Enforcement Reform in Canada: If Not Now, When?

CFA Institute's Board Chair calls for effective Canadian securities enforcement to restore the public's trust in capital markets and the investment profession.   

TORONTO, Jan. 13 /CNW/ - Margaret Franklin, CFA, chair of the Board of Governors of CFA Institute today called for fundamental changes to securities enforcement practices in Canada, including an overhaul of the RCMP's Integrated Enforcement Market Teams (IMET).

In a speech to The Canadian Club of Toronto, Franklin cited failures in Canada's enforcement practices while making the case - supported by a series of recommendations - that strong and efficient enforcement of the securities industry should be a priority for government, regulators and investment professionals.  Further, Franklin made the case that effective enforcement is essential to restoring the public's trust in our capital markets and the investment profession.

"While investing is often seen as elitist and white collar crime is viewed dramatically differently from gun and gang-related crimes, the integrity of, and confidence in, our financial system is critically important to the well-being of this country and should be as much of a priority as dealing with violence in our communities," Franklin said.

Citing examples such as Bre-X, Crocus, Norbourg, Berkshire and Andrew Rankin and Daniel Duic, Franklin said, "cases such as these cause the industry as a whole to suffer as a result of a tainting of the pool and eroded investor confidence.

"I continue to be shocked that industry participants aren't outraged and demanding stronger enforcement because this is about our business, which is about trust." 

According to Franklin, one of the most significant weak links in the chain of enforcement, is IMET.  Launched in 2003, this agency is comprised of 10 investigative units in four cities across Canada and describes itself as a group of highly specialized investigators dedicated to ensuring that those who commit serious capital markets fraud offences will be discovered, investigated, prosecuted, and incarcerated in an effective and timely fashion

"At a cost of more than $100 million dollars to Canadian taxpayers, IMET has a grand total of five convictions from 26 arrests.  Without question, IMET needs to be revamped from top to bottom," she said.

In an effort to address the deficiencies in Canadian securities enforcement practices, Franklin recommended the following:

  • To avoid the situation where individuals leave the industry to avoid having to pay enforcement-related penalties, IIROC and the MFDA should be granted the statutory ability to collect fines.
  • That obtaining the Canadian Securities Course should be a minimum requirement for employment as an investigator with a Canadian regulator.
  • Increase the number of securities lawyers with industry experience, particularly those with compliance backgrounds, working at the senior most levels of the provincial securities administrators.
  • Canada needs to adopt a single, national regulator that will help streamline detection, investigation, and disciplinary proceedings.

"Consistent with our mission of professional excellence through education and ethics training, I'm pleased to announce that CFA Institute will now offer Canadian provincial administrators and SRO employees easier access to Level 1 of the CFA Program," Franklin said. 

Finally, Franklin said that CFA Institute will be calling for a federally commissioned task force to create the awareness and political will to tackle these issues.  As part of its mandate, this task force will examine the recommendations from previous task forces - notably the 2006 Task Force to Modernize Securities Legislation in Canada which provided 33 well-received enforcement-specific recommendations - with a goal of determining why so few have been introduced.

"We will be inviting others in the industry who share our interest in regaining investor trust and confidence by enhancing enforcement practices to join us in the push for this task force.  The task force will be made up of associations and advocates who believe that Canada needs a fair playing field for all investors." 

CFA Institute

CFA Institute is the global association for investment professionals. It administers the CFA and CIPM curriculum and exam programs worldwide; publishes research; conducts professional development programs; and sets voluntary, ethics-based professional and performance-reporting standards for the investment industry. CFA Institute has more than 100,000 members, who include the world's 90,000 CFA charterholders, in 135 countries and territories, as well as 135 affiliated professional societies in 58 countries and territories. More information may be found at

*A copy of Ms. Franklin's speech is available upon request.

SOURCE CFA Institute

For further information:

Alison Ford
P: 416-645-3296
C: 647-291-1036

Kathy King
CFA Institute
C: 434-227-2177

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