Canada and the United States Join Hands to Hunt Down Securities Fraud: Double Exposure for Companies and Their Executives?


Companies facing the recent surge of regulatory change in the United States, particularly under the Dodd-Frank Wall Street Reform and Consumer Protection Act, now may have Canadian regulators to worry about as well. On June 14, 2013, Canada’s largest securities regulator, the Ontario Securities Commission (‘‘OSC’’), announced that it has created a new division to criminally prosecute securities fraud, including activities like market manipulation, Ponzi schemes, and other illegal ‘‘boiler-room’’ activity. The OSC plans to develop a specialized unit to prosecute insider trading as well.

The commitment to securities reform on both sides of the border — coupled with the close regulatory relationship between the U.S. Securities and Exchange Commission (‘‘SEC’’) and the OSC — has significant consequences for Canadian and American companies and their executives. Assuming the regulators collaborate as extensively as anticipated, information gathered by the OSC using its stronger investigation tools will be provided to the SEC, and vice versa. Likewise, Dodd- Frank, which gives the SEC wide latitude in bringingenforcement actions against foreign defendants for certain non-domestic activity, will inevitably impact both American and Canadian entities and their representatives. These factors mean double exposure for the many companies subject to regulation on both sides of the border.

Originally published in World Securities Law Report, 08/02/2013.

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Topics:  Canada, Compliance, Criminal Prosecution, Employer Liability Issues, Enforcement, Fraud, OSC, Ponzi Scheme, SEC, Securities Fraud, White Collar Crimes

Published In: Business Organization Updates, General Business Updates, Criminal Law Updates, International Trade Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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