Federal Finance Minister Jim FlahertyCHRIS WATTIE
The new federal legislation for a national securities regulator is expected to bolster enforcement powers for regulators and create a more independent body to hear cases against violators.
Finance Minister Jim Flaherty is expected to unveil new draft legislation as early as Wednesday, and has said he will immediately refer the proposed law to the Supreme Court of Canada for a ruling on its constitutionality.
Sources familiar with the new legislation said it will act on a number of recommendations contained in a 2009 report by an expert committee on securities regulation headed by Tom Hockin.
In particular, the act will boost the powers of regulators investigating and prosecuting white-collar crimes, acting on a long-standing complaint that Canada has a weak record on prosecuting securities crimes.
The draft legislation will also propose the creation of an independent tribunal to rule on securities cases, addressing concerns there is too much potential for conflicts of interest under the existing system. Currently, commissioners in most provinces both oversee the operations of securities commissions and also hear cases being prosecuted by the commissions under provincial securities acts.
Various reports over the years have recommended creating a separate, independent tribunal to oversee cases so that the same organization does not act as investigator, prosecutor and judge of a case.
A source said the new act will contain "nuances" in the independence of the tribunal so that there is not complete independence.
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The Hockin report, released in January, 2009, recommended a national regulator should still retain jurisdiction over some decisions, such as granting discretionary exemptions from securities regulations, as well as making rulings on matters involving contested takeover bids.
"The securities regulator has the policy expertise and the quick response capability to properly address these matters in a more timely fashion, which in our opinion outweigh the benefits of referring these decisions to an independent tribunal," the Hockin report said.
A spokeswoman for Mr. Flaherty would not comment Tuesday on the date the new act will be released, but a source briefed on the document said it is expected to be released any day. Mr. Flaherty told reporters three weeks ago he would complete the legislation within "days" and would be tabled "within a matter of weeks."
One source said the new act is not expected to contain details about where the head office of a new regulator will be located - one of the most contested questions facing provinces considering whether to join the new body. It is also not expected to outline details of proposed regional offices across the country, with those decisions expected to come separately down the road.
Such decisions will be critical to a final decision by some provinces about whether to join a new regulator.
Ontario, most ardent supporter, has repeatedly insisted the head office should be located in Toronto, while other provinces have said they would not want to join a new regulator if it is dominated by Ontario.
Quebec and Alberta have already launched court battles to have the project halted on grounds it infringes on the constitutional rights of provinces to oversee securities regulation. Manitoba has also refused to appoint a representative to an advisory panel of provincial representatives overseeing the design of the new system. Other provinces have representatives on the committee, but have repeated they will not give a final answer on joining a national regulator until they see details of its structure.
B.C. Finance Minister Colin Hansen said several weeks ago he believes the national regulator project is still "heading in the right direction," but said he has also told the federal government that the province's support remains conditional and will depend on how the regulator is structured.
"We do have certain things that we think need to be accomplished as this gets fleshed out," he said.
Mr. Hansen said the best model "is one that doesn't have just one central office" but is geographically dispersed. But he said he was not insisting the head quarters should be in British Columbia.
"What we're more concerned about is just making sure we get the right model for the national securities regulator, and I think the issue around where the offices are located should be a secondary discussion to getting the concept right."
Janet McFarland