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June 28, 2021

Securities fines rarely paid in Canada: report

If there can be anything positive to take away from securities fraud, anything at all, it must be that violators are punished.

For scamming or duping or whatever it may be, financial advisors or crooked portfolio managers are dinged for their missteps. Their licenses stripped, their wallets lightened.

But a new investigation into securities fines throws that last point in dispute, and suggests Canada’s securities penalties are a “farce,” as one source says.

According to CBC News, nearly two-thirds of fines levied by provincial securities regulators in Canada over the past five years have gone unpaid.

The CBC investigation went through province by province, finding that the great deterrent to securities violations – fines, often in the tens of thousands of dollars – are rarely recouped.

*Bing: How to check out a financial advisor

Across the country, only two provinces received payment of more than 50 per cent of securities fines levied between 2007 and 2011: Alberta and Quebec, which received 77 per cent of fines handed out, the highest by far in the nation.

But it gets rapidly worse from there.

The national average for paid securities fines between 2007 and 2011 sits well below 40 per cent, and some provinces can barely crack 20 per cent.

The lowest, British Columbia, only received 2.9 per cent of fines during that period.

“It’s all a farce,” said George Schwartz, the president of a now defunct Ontario company that was fined by regulators. “That’s what I’m trying to tell you. And people take it to be a farce and the regulators are not enforcing it.”

According to one governing body, the B.C. Securities Commission, collecting fines is difficult because violators often skip town, end up in jail or go broke themselves.

Of the $444 million in penalties levied between 2007 and 2011, $285 million has not been paid.



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Gordon PowersGordon Powers

A long-time fund company executive, Gordon Powers now heads up the Affinity Group, a financial services consulting firm. Gordon was a personal finance columnist for the Globe & Mail for many years, has taught retirement planning...

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