Report: Canada's fragmented anti-fraud enforcement needs fixing
Wednesday, August 13, 2014 at 7:18AM
Julie DiMauro in 2013 Corruption Perceptions Index by Transparency International, Canada, FAIR Canada, Foundation for the Advancement of Investor Rights, Industry Canada, Ontario Securities Commission

A report by the Foundation for the Advancement of Investor Rights (FAIR Canada) recommends that Canada create a national agency to centralize the reporting and enforcement of crimes.

"Numerous regulators, police agencies, and other organizations across the country share responsibility for preventing, deterring and detecting fraud, and taking enforcement action against it.

Despite these disparate organizations’ overlapping duties to protect Canadian investors against fraud, no formal strategy or framework exists to ensure that the system works efficiently,” the Financial Post reported on Monday, quoting the report.

The investor advocacy group, whose 55-page report was funded by Industry Canada and contains 10 recommendations, says there is a "poor perception of enforcement in Canadian securities markets [that] warrants attention."

Despite the efforts of regulators, there is a general lack of data and analysis of investment fraud, and many such crimes go unreported, the report says.

As a result, trends are not spotted or publicized, which allows investors to be pulled into more instances of fraud.

“While we believe that enforcement departments at Canadian securities regulators and SROs [self-regulator organizations] are well-intentioned and proficient in their area of expertise, we were not assured that regulators are well-aware of how much fraud is perpetrated across Canada or in particular jurisdictions,” the report said.

It looks at the experience of other jurisdictions, including the UK, in making its recommendations.

Among them is the recommendation that provincial securities regulators explore crafting "whistleblower" programs to crack down on white collar crime.

The Ontario Securities Commission has been considering such a program for a couple of years and is expected to release a concept paper in the fall.

The FAIR Canada report also recommends that regulators work harder to help victims of investment fraud get lost money back, including seeking cooperation from other agencies to help track the funds.

"A coordinated approach to enforcement against investment fraud across Canada could result in better information sharing, case coordination, and, most importantly, clear signals to the market that fraud is an enforcement priority in Canada," the FAIR Canada report declares.

Canada maintains a perennial top-ten ranking on Transparency International's Corruption Perceptions Index, coming in at number nine in 2013.


Julie DiMauro is the executive editor of FCPA Blog and can be reached here.

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