Securities Regulation and the Public Interest: Of Politics, Procedures, and Policy Statements - Part I

Abstract

In this article, the author notes that one of the truly extraordinary aspects of securities regulation in Canada is the extent to which the various provincial securities Acts, and regulations promulgated under the Acts, have been surpassed in importance as sources of "law" by various non-legal instruments published by the securities commissions. The putative source of this "mandate" is the various powers in the securities enactments that enable the securities regulators to act "in the public interest". The public interest powers have done more than simply supply a (questionable) jurisdictional foundation for the policy statements: they have supplied the practical motivation for compliance with the policy statements by the securities community. Two recent decisions, however, cast grave doubt on the ability of the securities regulators to use policy statements to add substantive requirements to those contained in the Act or regulations. The author explores various policy statements issued by securities regulators in Canada, and discusses Pezim v. British Columbia (Superintendent of Brokers) and Ainsley Financial Corp. v. Ontario (Securities Commission) as examples of recent challenges to the use of policy statements as de facto law. Taken together with the second part of this article, the two parts are substantially the same as a paper delivered at the mini-conference "The Ontario Securities Commission: Advice to the Chairman" on December 17, 1993, and sponsored by the Canadian Business Law Journal, in cooperation with the Faculty of Law, University of Toronto.