The Canadian Securities Administrators yesterday released its 2012 Enforcement Report, which summarizes the enforcement activities of CSA members over the last few years. Highlights of the report include data regarding proceedings commenced in respect of a number of categories. For example, proceedings for insider trading dropped from nine in 2011 to four in 2012, while proceedings for illegal distributions dropped from 77 to 53.
The report further breaks down enforcement cases into six categories, including for the first time "fraud" in its own category. These are described in the report as follows:
- Fraud - While the precise definition of fraud
varies by jurisdiction, the consistent elements in fraud cases are
deceit and deprivation.
- Illegal distributions – A sale or attempted sale of securities to investors that does not comply with securities law registration, trading or disclosure requirements (some of which also constitute fraud).
- Misconduct by registrants - This generally occurs when a registered person or company violates securities laws, when a person fails to register when required to do so, or to fails to adhere to the conditions of a registration exemption.
- Illegal insider trading - Involves buying or selling a security of an issuer while possessing undisclosed material information about the issuer, and includes related violations like "tipping".
- Disclosure violations - Violations that undermind confidence in the accuracy of the information that companies disclose about their business activities, including misleading and untrue statements.
- Market manipulation - This involves efforts to artificially increase or decrease the price of a security.
With respect to the conclusion of proceedings, 57% of matters went to a contested hearing before a tribunal, while 23% concluded by way of settlement agreement and 20% in court proceedings. CSA members also administered over $36 million in fines and administrative penalties in 2012, down from $52 million in 2011. Highlights of specific cases are also included in the report.
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