Howard Wetston is sporting a colourfully bruised eye after bumping into an open car door. But despite appearances, the new chairman of the Ontario Securities Commission says he actually has a pretty thick skin.
He knows he’ll need it. The former chairman of the Ontario Energy Board says he is braced for the public criticism he will face in his controversial new job leading Canada’s largest provincial securities regulator.
“I realize there are powerful interests in the securities industry and I realize there will be a lot of criticism, but I think I have to keep in mind what it is that we’re trying to do here,” he said Wednesday in his first media interview since starting his job three weeks ago.
“You have to roll with the punches and you have to do the best job you can. And I always sit back and say to myself, ‘Did I do the best job I could?’ And if I didn’t, you’d be the first one to hear me say I did not do a good job. I’m not embarrassed to say it.”
One of the controversies he pledges to tackle is Canada’s track record for investigating and prosecuting securities crimes, which has been a frequent subject of complaints – especially when Canadian regulators are compared with the activist U.S. Securities and Exchange Commission.
Mr. Wetston says he wants the OSC to seek more jail terms for securities offenders, which means making more use of the commission’s powers to pursue cases in provincial court, where jail sentences are a possible outcome.
The OSC has used the court option less often in recent years, instead preferring to pursue cases as administrative hearings before a tribunal, which means the primary punishments are fines or bans from working as a director or officer of a public company.
“If we feel that somebody needs to go before the Court of Justice because a jail term is appropriate, we will take them,” Mr. Wetston said. “There would be no question about it.”
But as a former prosecutor and a former federal court judge, Mr. Wetston also knows the court option presents difficult hurdles. There is a higher burden of proof in court and the process tends to move much more slowly.
As a result, Mr. Wetston argues courts should only be used when a jail term is clearly the OSC’s desired outcome.
Seated at a table already covered in stacks of paperwork, Mr. Wetston says there are 115 open case files being assessed and 44 active investigations in the enforcement department at the OSC – a pace that has surprised him.
“The activity level on the enforcement side is more significant than I had realized prior to coming here,” he acknowledges.
Mr. Wetston said he also wants to make the OSC a more open institution, so people know more about its work and investors know staff are committed to working in their interests.
His window of opportunity to make his mark on the OSC may be smaller than for past chairmen. He has been appointed to a three-year term rather than the standard five years because the Ontario government is supporting plans to create a national securities regulator in the next few years.
Ontario Finance Minister Dwight Duncan could not have found a more passionate advocate for the national commission.
Mr. Wetston argues it is time for provinces to let go of their “sacred cows” and embrace a national regulator, saying it would improve policy making in Canada by allowing regulators to respond more nimbly to emerging issues and more easily identify burgeoning systemic risks.
“I believe a national commission would be a powerful force for good in our financial society,” he says.
He also argues Toronto should logically be the location for the new “chief regulator” who would oversee the new regulatory organization because the city is the centre of Canada’s financial markets.
“From my perspective, I can’t imagine that the chief regulator’s office would be anywhere else but in Toronto,” he said.
Mr. Wetston also has no concerns that plans for a new regulator will lead to policy inertia over the next two years as provincial regulators wait to see whether their efforts will be superseded by a national commission.
He says he is confident any progress achieved on new rules and harmonized standards can be incorporated into the new organization.