The BC government proposes sweeping changes to the Securities Act (British Columbia) (the “Act”), which will allow the British Columbia Securities Commission (“BCSC”) to better address white collar investment crime. Proposed through Bill 33 Securities Amendment Act, 2019, the amendments will provide the BCSC with some of the strongest powers in Canada to protect investors and enforce sanctions. These are the first major revisions to the legislation in almost a decade.
Government Sought Changes Two Years Ago
The changes were prompted two years ago, when Finance Minister Carol James asked the BCSC to come up with a plan to increase fine collection. Ms. James 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 2018/2019, the BCSC imposed sanctions of $35.4 million. During the same year, it collected $5.2 million of which $0.3 million related to sanctions imposed in that year and $4.9 million related to sanctions imposed in prior years. It also returned $7 million to investors through a court-appointed receiver. Two years after Ms. James’ plea, the proposed amendments would give the Act stronger powers and better assist the BCSC with its enforcement mechanisms.
Changes Will Assist In Collecting Fines And Enforcing 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.
Changes Aimed At Protecting The Integrity of Capital Markets
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. The second reading of Bill 33 was on Monday, October 28, 2019 and a copy of it can be found here.