The Alberta Securities Commission (ASC), the regulatory agency responsible for administering provincial securities laws in Alberta, announced last week that it would be following the lead of its Ontario and American counterparts in allowing respondents the opportunity to enter into no-contest settlement agreements in certain, prescribed situations. The change, instituted via an addition to the Credit for Exemplary Cooperation in Enforcement Matters Policy (ASC Policy 15-601), will allow respondents to avoid investigation by the ASC while also avoiding any admission of wrongdoing or guilt, if they qualify.
No-contest settlement agreements are attractive options for respondents seeking to avoid a lengthy ASC investigation and the accompanying damage to one's reputation. Without needing to admit guilt, the respondent can instead settle with the ASC and pay an agreed-upon fine. No-contest settlement agreements are beneficial to the ASC as well. By expediting cases, the ASC can free up limited resources to pursue other securities violations instead. These agreements can expedite restitution by a respondent directly to investors, or those harmed by their actions.
However, no-contest settlement agreements are only available in limited circumstances and at the sole discretion of the ASC. No-contest settlement agreements will be considered only where individuals have self-reported, fully cooperate with the ASC in its investigation, and take financial responsibility for their actions. A full list of the factors influencing the available of a no-contest settlement agreement can be found on the ASC website, here.
Conversely, a no-contest settlement agreement will not be considered where the ASC has a reasonable belief that the respondent has engaged in abusive or fraudulent misconduct, or if it is in the public interest to proceed with an investigation.
This change brings Alberta in line with Ontario. The Ontario Securities Commission (OSC) has allowed the use of no-contest settlement agreements since 2014. As of the end of 2017, the OSC had finalized 10 no-contest settlements with financial institutions, resulting in approximately $358 million in compensation to investors.1
An updated copy of the ASC Credit for Exemplary Cooperation in Enforcement Matters Policy can be found on the ASC website.
Footnote
1 Ontario Securities Commission, News Release, "OSC Approves No-Contest Settlement Agreement with Assante Capital Management Ltd. and Assante Financial Management Ltd." (21 December 2017), online: OSC News & Events <http://www.osc.gov.on.ca/en/NewsEvents_nr_20171221_osc-approves-no-contest-settlement.htm%20.
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