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Jack MintzChris Bolin/The Globe and Mail

Ontario's top securities watchdog is calling out policy pundit Jack Mintz in a rare public rebuke.

Despite being known as a regulator that rarely ruffles feathers, the Ontario Securities Commission is set to publish an "open letter" to Mr. Mintz on Tuesday, penned by vice-chair James Turner, a former senior partner at Torys LLP. The letter criticizes Mr. Mintz's recent remarks about provincial securities regulators' attempts to revamp the way Canadian companies raise money in private markets.

In November, Mr. Mintz, who runs the University of Calgary's School of Public Policy, released a paper that took aim at a proposal to add an extra class of investors who can buy private securities.

Currently, only "accredited investors," or those with $1-million in net financial assets or net income above $200,000, can invest in securities sold solely in private markets. These "exempt securities" do not trade on public exchanges and their companies' financial disclosures are often limited or do not exist.

To make it acceptable for more Canadians to invest in private securities, the OSC proposed adding a new class of investors who have a net income of at least $75,000 or have $250,000 in net assets, excluding their primary residence.

If the new rules are accepted, these individuals will be able to buy up to $30,000 worth of private securities a year.

Mr. Mintz argued there is no proof that any restrictions on these investors is necessary, largely because his research found no proof of rampant fraud or other major concerns prevalent in private markets. "The first question we should be asking is: what is the problem?" he said during a panel discussion in November on the report.

"I think we should wait a year before we put in regulations that could do a lot of harm," he said. "Let's slow down. The world won't fall apart."

The OSC said it was shocked to hear his criticisms. "We are very substantially opening up the exempt market, particularly for junior issuers, to raise capital," Mr. Turner said in an interview. Yet Mr. Mintz made it seem as if the regulators were doing the opposite by denigrating the proposal.

"We think it's very important for our market to open up and liberalize," Mr. Turner added.

The OSC was also surprised by the call to slow down, considering regulators are often criticized for being too slow to act. In this case, more review would make it harder for Canadians to invest in private securities. "Delaying means not making any of these new exemptions available," Mr. Turner said.

A spokesperson for Mr. Mintz declined to comment on the letter, which was sent to him Monday.

Within the text, the OSC defends the proposals as being "measured, informed and incremental." The regulator also takes issue with Mr. Mintz's claims that the watchdogs are "shooting in the dark" considering "the extensive consultations that support our proposals."

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