is that the new language must represent something additional to
what was already there.
There is a principle in interpreting statutes that Courts, and
by extension tribunals such as the OSC, will give effect to each
word or phrase in a statute. This means that in general, Courts
and tribunals will assume that the Legislature intended all words
in a statute to mean something – that the words are not simply
superfluous. This principle is even more compelling as a guide
to interpretation where, as in this case, words are added to an
Market participants were always required to keep books and
records “as may otherwise be required under Ontario securities
law”. They now have to keep records as may reasonably be
required to demonstrate compliance with Ontario securities law.
So, this must include something beyond what is presently required
under Ontario securities law.
The bottom line is that the language appears to give OSC
staff a broad and open-ended tool to demand a whole new swath
of ill-defined books and records. Because the provision is new, it
is unclear exactly how staff and the Commission will interpret and
apply this requirement. For market participants, they face a new and
amorphous obligation with little or no guidance on what it means.
In terms of why this matters, firms, and particularly smaller
firms, are already groaning under the strain of compliance
obligations imposed by financial regulators. This is yet another
potentially significant one.
OSC staff has a broad power to conduct compliance
reviews of market participants. One of the things they look for is
compliance with the books and records requirements. Taken to
its extreme, firms can have their registration suspended or even
revoked for a breach of the books and records requirement.
This is pretty significant stuff for an amendment that was
passed using the legislative equivalent of sneaking into the house
So far, the OSC has said nothing on this issue. There was no
press release accompanying the change or any communication at
all about what the amendment means. Perhaps it is time that they
say something to market participants. And for everyone outside
of the OSC’s jurisdiction, how this new records requirement plays
out may well be relevant to you. It is entirely possible that other
securities regulators will want this new and open-ended tool as well.
Janice Wright and Greg Temelini are litigators specializing in regulatory
defence, and commercial and securities litigation at the firm Wright
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In today’s complex business environment, brokers and
business leaders are under pressure to keep up with
changing requirements and increased regulatory scrutiny.
Bringing the most current knowledge, in-depth experience
and strong leadership capabilities, MNP is committed to
working closely with private capital markets across Canada
to help our clients take their business to the next level.
Contact Sean Du Plessis, CPA, CA at 403.536.2161
or firstname.lastname@example.org or contact
Stephen Warden, CPA, CA, CMA at 416.515.3893
INCREASED FINANCIAL &
REGULATORY REPORTING REQUIREMENTS.
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