BCSC to target lower-level rule breaking with 'speeding tickets'

Those who break investment market rules at the lower end of seriousness in BC may now be penalized without the need for a hearing before a panel of commissioners.

The British Columbia Securities Commission (BCSC) has announced a new enforcement procedure that will impose financial penalties in a faster, less cumbersome process.

The new Administrative Penalties Imposed by Notice (APIN) will be used for violations of regulations or previous decisions of the Commission or Executive Director, but not for misconduct that is prohibited by the Securities Act which will still require a panel hearing.

Bans or restrictions on market participation or repayment of illicit proceeds will also still require a panel hearing as will any misconduct that requires a higher penalty or additional orders.

Law enforcement and the judiciary frequently uses expediated penalties for summary offences such as disturbing the peace or minor motoring violations.

However, while the type of rule breaking that will be handled with APIN may be less serious, the financial penalties can still be significant - up to $100,000 per violation for individuals and $500,000 per violation for entities, such as companies – although far below the typical $1 million maximum that can be imposed after a panel hearing.

The level of APIN financial penalty will reflect the specific facts of the case, past conduct, and mitigating circumstances among other factors.

"Using this power, the BCSC will be able to quickly respond to less serious contraventions with a streamlined process," said Doug Muir, the BCSC's Director of Enforcement.

The BCSC is the only Canadian securities regulator to have the power to impose administrative penalties without a hearing. It follows amendments to the Securities Act in 2020.

How APIN will work

• If BCSC staff detect an applicable violation, they may submit a report to the Executive Director describing the alleged violation, as well any facts that may call into question or mitigate the violation, and recommend a penalty.
• If the Executive Director believes a violation occurred and a penalty is warranted, a written notice will be delivered to the person or entity, specifying each violation, the penalty for each violation and the date by which the penalty must be paid or disputed.
• If the party doesn't dispute the notice, the Executive Director will make it public. If a person or entity disputes the violations or penalty, the Executive Director will consider their challenge and issue an order confirming or revising the notice. If a penalty is imposed, it will be made public.
• Affected parties would then be able to request that the Commission conduct a hearing and review of the Executive Director's decision. As with other panel decisions, the affected party could appeal to the B.C. Court of Appeal.