The federal government says it "has taken note of the concerns" raised by a recent Globe and Mail investigation into fraud, repeat offenders and lax enforcement in capital markets and is looking to address them with its provincial counterparts.
Finance Canada said it is continuing to work with provinces to create a co-operative regulatory system that would improve enforcement and provide better protection for investors.
The Globe's year-long investigation found serious oversight problems among Canada's patchwork of provincial securities regulators. People found guilty of violating securities laws frequently reoffend, and at least $1.1-billion in securities fines have gone unpaid.
Ottawa expects to see better national securities enforcement when it establishes its long-promised Cooperative Capital Markets Regulatory Authority, a joint effort with Ontario, Saskatchewan, British Columbia, New Brunswick, Prince Edward Island and Yukon. By joining forces, those governments aim to strengthen oversight and improve co-ordination with police and prosecutors.
"The co-operative system will better protect investors, encourage efficiency and innovation and make the system better able to address systemic risk in capital markets," Ms. Sweet said.
However, provinces are pledging to act on their own, with both Ontario and Alberta indicating this week they will address the enforcement problems identified in the Globe series.
Ontario Premier Kathleen Wynne has vowed to crack down on repeat offenders who break securities laws and those who don't pay their fines. She told The Globe that she intends to take the matter up with provincial Finance Minister Charles Sousa and determine what steps will be taken in the coming months.
Alberta's Finance Department also expressed concern over reports of lax enforcement, with a spokesman saying the government wants to ensure regulators have the tools they need to properly police securities markets and protect investors.
Together, those provinces account for about 75 per cent of the country's capital market activity.
The Canadian Securities Administrators, which acts as an umbrella organization for provincial and territorial securities commissions, complained that the Globe series "mis-characterized" the enforcement efforts but said more law enforcement resources "are always welcome."
The federal government has taken several runs at creating a national securities commission that it would run in collaboration with the provinces. However, several provinces – notably Quebec and Alberta – have resisted any intrusion into their jurisdiction.
The Supreme Court of Canada ruled last May that Ottawa's efforts to unilaterally set up a national securities regulator were unconstitutional. The court ruled the federal government does have a role in managing system-wide risks in capital markets and in collecting national data. At the same time, the provinces can enter into a co-operative system.
An interim co-operative body was established in July, 2015, and a chief regulator was appointed a year ago. However, federal and provincial legislation is needed for it to become fully operational. Ms. Sweet could not comment on a timetable for Ottawa's legislation, although the finance ministers involved have said they want the system to be up and running in 2018.
Still, a recent C.D. Howe Institute study concluded the co-operative authority represents a "significantly compromised plan B" after Ottawa was frustrated in its bid to create a national regulator.
"In its current form, it is not even obvious that the [co-operative system] will constitute an improvement relative to Canada's existing securities regulatory system," said Harvey Naglie, a former senior adviser in the Ontario Ministry of Finance, in the paper, which was released in September.