OSC announces “no-contest” settlement program
March 13th, 2014
The Ontario Securities Commission decided it will now settle enforcement proceedings in some cases without requiring admissions of fault (announced on March 11, 2014).
This changes the OSC’s prior practice of generally requiring parties subject to enforcement to openly admit misconduct before the OSC would settle the enforcement proceeding. This remains the practice if the accused has committed fraud or other serious misconduct. But in other cases (explained in OSC Staff Notice 15-702), for example if a company self-reports a lesser compliance issue and pays necessary compensation, the OSC may resolve charges against the company without requiring it to say it did anything wrong. The final settlement must still be approved by an OSC hearing panel.
The United States Securities and Exchange Commission has used similar “no-contest” settlements for some time. They are controversial and seen by some as a way to avoid accountability for securities law violations. But the OSC has decided that selectively using this option will speed up settlement negotiations and free resources to focus on more serious cases.