Canada suffers from Weak Securities Regulations
Every country has securities regulations to protect the investors and curb any illegal act.
The weakness of Canada’s securities regulation was well reflected by The Ontario’s Securities Commission’s fraud allegations last month. This took place against the recently delisted Chinese company.
Last year, Carson Block’s research firm Muddy waters questioned the Sino-Forest’s vast timber holdings. This is another example of weakness.
Even in 1990 fraud no one was convicted for the biggest mining scandal.
Allen Chan, CEO of Sino Forest and four of his lieutenants are heading for a hearing in July. They are alleged to have built the company on phony assets like non-existent timberlands and phantom profits. The OSC charged them with “dishonest courses of conduct” related to “the purported sale and purchase of timber”.
As the RCMP is still investigating the case, speculations are made that Chan and his colleagues have bleak chances of getting any punishment. OSC has to invest a long time in going through the documents written in Chinese language and comprehending them.
OSC Chairman, Howard Weston says that “cases in two different countries require a significant commitment in terms of resources and time both.”
The only step OSC can take is to stop the violators from working as Directors of an Ontario Company.
Experts also suggest implementing the strategy of United States to deal with white collar crime.
The implementation of any hard strategy is considered to be “non-Canadian”.
None of the 10 Provinces and Territories of Canada has SEC like federal regulatory agency. This is unbelievable for the other developed nations.
Last year the Finance Minister, Jim Flaherty had attempted to establish a single national securities regulator. Unfortunately he was rebuffed by the Supreme Court of Canada. Also Ottawa has been encouraged by the Court to formulate a plan pertaining to this.
The centre of Canadian Securities industry is located in Toronto, yet, it should not restrict itself to investigate big fraud cases in one Province only.
Canada struggles with the regulations of 13 different government entities. Probably this is the cause of frauds happening all over. There is either a lack of definite regulations or the implementation seems to be weak. The scammers sneak through so many flaws of the system. The Governments together have to come to a stand to fight against any corruption related to securities.
Canada would have seen more of scandals due to its weak regulations and even a weaker implementation procedure.