The likes of stock promoters, public company executives and others working in B.C.’s public investment market may now face more immediate consequences for not cooperating with the B.C. Securities Commission; and should they face a fine for violating rules, their pensions are no longer sheltered from collection actions.
These changes and others are part of “greater powers to advance investigations of investment market misconduct and hold people accountable for their illegal acts,” stated the commission in a July 20 statement.
In a high-profile case, the commission found itself on the losing end of a preservation order when the B.C. Court of Appeal found in November 2021 that new securities laws still did not supersede the Pension Benefits Standards Act. And so, Earle Douglas Pasquill, who owes $36.7 million was able to keep his $644,951 pension fund despite efforts by the commission to obtain it.
New legislative amendments by the Ministry of Finance to the Pension Benefits Standards Act and the Pooled Registered Pension Plans Act that came into force July 17 allow the commission to collect money from pensions.
Commission chair and CEO Brenda Leong said the amendments strengthen the commission’s “ability to investigate misconduct and support stronger protections for investors.”
Obtaining penalties and disgorgement orders levied against violators has been historically difficult for the commission.
In 2021, the commission collected just $258,000 of sanctions despite being owed $553 million since inception. In 2019, the commission collected about $5.2 million, the most in any year, according to annual reports dating back a decade.
In May 2022, the commission’s director of enforcement Doug Muir said about $114 million is considered un-collectible due to death, bankruptcy, dissolved corporations or the fine being past a limitation period of 15 years. Another $161 million is considered difficult to collect due to people being in jail, missing or subject to court-ordered restitution. Or, they simply have no assets.
In addition to the commission now being able to access pensions, it will now be able to impose administrative fines on people who fail to comply with a summons or demand to provide information. Prior to the amendments, the commission had to apply to the Supreme Court for an order that a non-cooperative person be liable for contempt, which it says is a time-consuming process.
Other updates to the act include:
- authority to regulate auditors of registrants, which would be consistent with the approach to auditors of U.S. registrants;
- authority to impose continuous disclosure obligations on issuers that are not reporting issuers, such as pooled funds; and
- a new ability for the commission to seek court orders — including payment of restitution or damages — if a person has been convicted of a Criminal Code offence related to securities or derivatives.
