The Ontario Securities Commission is considering granting people immunity from prosecution to help speed up investigations and conclude more cases.
OSC chairman Howard Wetston, who took over the top job at the commission in November, said Wednesday he wants to find ways to convince more people to come forward and settle cases, including immunity agreements and giving more credit to people who co-operate with investigations.
The commission is also considering allowing people to settle their cases and face a penalty without having to admit wrongdoing, he said. The practice has been long used by the U.S. Securities and Exchange Commission, but is not allowed by the OSC.
"We're constantly being asked to increase our enforcement activity, and enforcement is very challenging," Mr. Wetston told reporters following a breakfast speech in Toronto.
"So sometimes we have to use other tools … . I think all the things I've mentioned potentially increase the opportunity to increase our enforcement."
In the past, the practice of allowing people to settle without admitting to wrongdoing has proved controversial when they later insisted they did nothing wrong and have admitted to no breaches of the Securities Act. But supporters of the rule say it spurs more settlements because many people are unwilling to make admissions that can be used against them in civil lawsuits.
Securities lawyer Joe Groia said he has had "at least a half dozen" cases in the past year where people would have settled if they could have avoided admitting fault.
"The number one difficulty in settling cases with the commission now is the fact that they refuse to do a deal that doesn't essentially leave my client completely naked for the civil proceedings," he said.
Mr. Groia said the promise of immunity would also bring more people forward, but that the key will be working out the details for receiving immunity. Either specific conditions have to be clearly spelled out in the policy, or there have to be assurances the information provided will not be used against someone if the OSC rejects the immunity request, he added.
The OSC has had a policy since 2002 to give credit to those who co-operate in investigations, but it is rarely used because it provides little reassurance to encourage people to come forward. Mr. Wetston said he wants to clarify the policy so it can be used more often.
He said he sees immunity deals as part of the "spectrum" of credit granted for assisting in investigations. Mr. Wetston introduced immunity when he headed the federal Competition Bureau, and said the program was successful in drawing out testimony in price-fixing cases.
University of Toronto business professor Richard Powers said he endorses Mr. Wetston's proposals, but they should be coupled with a pledge for tougher penalties in enforcement cases or they risk making punishments less significant - especially for people with plenty of money to pay fines.
"While settlement agreements increase the head count, they amount to little more than a 'get out of jail free' card, and provide those of means to live to scam another day," Mr. Powers said.
But Toronto securities lawyer René Sorrell said even settlements without admissions carry a stigma and can be a significant penalty, and many people will still assume the accused were responsible for some sort of inappropriate behaviour.
"It will still carry a big punch, because people will always read the settlement agreement in the context of the statement of allegations," he said.
Lawyer Kelley McKinnon, who was previously chief litigation counsel at the OSC, said the commission can "spend more time than anything else" in negotiating the admissions for settlement agreements, so allowing settlements without admitting guilt would greatly speed up the system.
She said the practice would be especially valuable in cases where people have inadvertently broken rules such as disclosure requirements.
"You could process any number of omission or mistake types of cases much faster," she said.