Sneaking and Peeking:
By Jordan Glick
In the 1983 classic Scarface, Tony Montana was
recorded laundering millions of dollars by a video
camera disguised as a clock. His captors understood
one important lesson: capturing sophisticated
criminals requires sophisticated tools.
Until recently, it seemed like the Ontario Securities
Commission (OSC or the Commission) would never
learn that lesson.
And then, in May of 2013 (coincidentally just after
the movie’s thirty-year rerelease), the OSC launched
the “Joint Serious Offences Team” (JSOT). The JSOT
enables OSC investigators, much like the police in
Scarface, to peek into the boardrooms and offices
of suspected corporate criminals and surreptitiously
record what they see.
The JSOT was launched with the goals of
prosecuting the most serious forms of illegal activity
in the securities industry including boiler room
operations, fraud and market manipulation. What is
unique about the JSOT is that for the first time, OSC
investigators have been empowered to obtain warrants
under the Criminal Code allowing them to intercept
e-mails, put hidden cameras and recording devices in
offices and secretly enter a place of business.
The JSOT initiative is the future of enforcement
in the securities industry. It reflects a key shift in
philosophy for our industry watchdog from passive
to active investigation. No longer must investigators
build their case by sifting through piles of corporate
documents created at some point in the past in
the hope of uncovering the smoking gun. Instead,
investigators can now approach cases in real time
and pursue suspects without waiting for the damage
to be done and for the paper trail to reveal itself.
This article will first review the traditional way
in which the Commission exercises its investigatory
search powers and the limitations of those methods.
It will then explore some of the new investigatory
powers afforded to the JSOT investigators and
consider their likely effectiveness in support of quasi-criminal investigations in the securities industry.