Under proposed legislation, B.C. Securities Commission would have the strongest powers in Canada to protect investors

  • December 06, 2019
  • Gosia Piasecka

The B.C. government proposes sweeping changes to the Securities Act (British Columbia), which will allow the British Columbia Securities Commission (BCSC) to better address white collar investment crime. These are the first major revisions to the legislation in almost a decade. Bill 33 – 2019: Securities Amendment Act, 2019 will provide the BCSC with some of the strongest powers in Canada to protect investors and enforce sanctions. Second reading of Bill 33 took place on Monday, October 28, 2019.

Reforms two years in the making

The changes were prompted two years ago, when Finance Minister Carole James asked the BCSC to come up with a plan to increase fine collection. The Minister encouraged the BCSC to propose new mechanisms that would allow it to more effectively collect fines and deter future misconduct. Postmedia News reported that between 2007 and 2017, the BCSC collected less than 2% of the $510 million in fines that it ordered to be paid.

During fiscal year 2018-19, the BCSC imposed sanctions of $35.4 million. It collected $5.2 million, of which just $300,000 was related to sanctions imposed in 2018-19 and $4.9 million related to sanctions imposed in prior years. It also returned $7 million to investors through a court-appointed receiver.

Enhanced powers to collect fines and enforce orders

The proposed changes, many of which are unprecedented in Canada, enhance the BCSC’s power to collect fines and enforce orders. A key change would allow the BCSC to seize property that was transferred to third parties for below market value. Sanctioned individuals often transfer properties to spouses or relatives for small amounts, such as $10, which has allowed them to shield properties from regulators.

Other proposed changes to the Act include:

  • increase in maximum fines;
  • increase in maximum jail terms;
  • new minimum sentences for repeat offenders;
  • power to seize RRSPs; and
  • power to direct ICBC to refuse renewal or issuance of driver’s licences or license plates.

The BCSC welcomed the amendments and the government’s goal to contribute to a fair capital market. “We’d like to thank the B.C. government for taking action to crack down on white collar crime with these ground-breaking amendments,” said Brenda Leong, chair and CEO of the BCSC. “We now have new and better tools to go after the bad actors who break the law and cause significant harm to investors and the capital markets.”

The changes will help victims of investment fraud recover funds and make it less desirable for individuals to create investment scams.

Gosia Piasecka is an Associate at Fasken Martineau DuMoulin LLP.