Today, we released the Canadian Securities Administrators Enforcement Report for fiscal year 2020/2021. The securities industry faced unprecedented and extraordinary challenges this past year. However, through their dedication and commitment, CSA members across Canada were able to overcome these challenges, shift to new ways of working and continue to take action against wrongdoers.
The urgency of the pandemic-driven crisis required a higher degree of collaboration between CSA members, in addition to constant coordination with law enforcement, self-regulated organizations, federal counterparts (the Bank of Canada, the Office of the Superintendent of Financial Institutions, and Finance Canada) and foreign regulators through the International Organization of Securities Commissions.
Throughout the year, we continued to investigate and take actions to better detect, deter and stop securities misconduct, including fraud, illegal distributions, market manipulation and insider trading. Highlights from the CSA FY2020/2021 Enforcement Report include:
- ?We adapted to the evolving circumstances and found balance between the measures meant to facilitate compliance with regulatory requirements (e.g., filings, fees, convening annual shareholder meetings) and measures to protect investors at a time of intense market volatility.
- We saw an unfortunate rise in wrongdoers who attempted to capitalize on the uncertainty related to the pandemic and the economy, a common occurrence with any significant market or news event. Among our actions to protect investors against harmful activity, we quickly dedicated resources to address emerging threats, and issued 159 Investor Alerts, which is 140% higher compared to fiscal year 2019/2020.
- We actively participated in the North American Securities Administrators Association (NASAA) Sweep, which targeted COVID-19 related investment scams, some of which involved identifying and shutting down advertising on social media and on digital marketplaces (e.g., Kijiji, Craigslist). Out of over 150 frauds and schemes uncovered by the NASAA Sweep, close to half (64) were identified by Canadian regulators.
- Virtual hearings and investigations increased for CSA members across the country. The virtual hearings made participation by respondents and witnesses easier, more affordable and more efficient, particularly for those in remote locations. Some CSA members will likely continue to offer them as an option.
- We commenced 52 cases against 133 respondents and referred 124 files from one jurisdiction to another for further action. We also imposed or obtained $20 million in administrative penalties and voluntary payments and more than $42 million in restitution, compensation and disgorgement penalties. While statistics do not tell the full story of CSA’s enforcement actions, this is a clear demonstration of our significant efforts to collaborate and achieve meaningful results.
- We launched our Market Analysis Platform (MAP), a data repository and analytics system designed to help all CSA members identify and analyze market misconduct more effectively. MAP has increased our efficiency and speed in accessing and analyzing trading activity, which is critical as capital markets continue to rapidly evolve. We also continued to conduct training for our enforcement teams on emerging topics with experts around the world, such as open-source intelligence and mobile forensics.
In summary, our collaborative actions and efforts during this unusual year provided us with an opportunity to improve our processes in order to move through the pandemic and look to the future with optimism.
I am particularly proud of the CSA members across the country. The exceptional work?they have accomplished in recent months has revealed the strength and resilience of the CSA and confirmed, no matter the circumstances, we are deeply committed to enforcing securities laws and protecting investors in Canada.
To download and read the full report, click here.
