BCSC adds new streamlined enforcement tool

The BC Securities Commission (BCSC) recently imposed a $12,000 penalty under a new enforcement mechanism in which financial penalties may be imposed without an administrative hearing before a panel of Commissioners.???

Administrative Penalties by Notice (APIN) give the BCSC the ability to levy financial sanctions without a hearing before a BCSC panel of commissioners. The BCSC is the first Canadian securities regulator to have this power, which was granted to the Commission through amendments to the Securities Act in 2020.?

APIN is more serious than issuing a caution letter to a company or individual, but less serious than a full-blown hearing to seek larger sanctions and market bans. APINs will help us respond quickly and decisively to correct less serious instances of market misconduct.???

Using this power, the BCSC’s Executive Director, will be able to impose a penalty to quickly respond to less serious violations of investment market rules. The APIN procedure will abide by principles of due process that we have set in place, and the notices will be posted publicly on our website.?

The maximum APIN penalty is $100,000 per violation for individuals and $500,000 per violation for entities, such as companies.?

Although some news accounts have likened APIN to a speeding ticket, it is much more than that.?

APIN decisions are the result of a rigorous procedure.?BCSC staff detect an applicable violation and submit a report to the Executive Director describing and providing proof of the alleged violation and recommending a penalty.??

The Executive Director will not only have to decide whether a violation took place, but must also consider whether imposing a financial penalty is in the public interest and if so, how much is appropriate.?

Penalties are not pre-determined by the type of violation. Instead, the Executive Director will consider several factors, such as the severity of the misconduct, any past disciplinary history, and the need for deterrence.?

If a person or entity disputes the violations or penalty, the Executive Director will consider their challenge and issue an order confirming or revising the notice. Affected parties will also be able to request that a BCSC panel conduct a hearing and review of the Executive Director’s decision. They can also appeal the panel’s decision to the B.C. Court of Appeal.?

By addressing a regulatory gap for securities law violations in this new way, we hope to foster compliance in the investment market, and ultimately, make the market more honest and fair for everyone.?To learn more about APIN and find recent actions, visit our website.?

-Written by Mark Hilford, Deputy Director, Enforcement, BCSC