The RCMP and Canada’s largest securities regulator are hoping to improve their record on tackling white collar crime by combining their efforts under one roof.
At the same time, Ontario Securities Commission chair Howard Wetston said the regulator is a step closer to its goal of working with police to obtain wire taps to prosecute insider-trading cases.
At a joint news conference Monday, Mr. Wetston and Steve White, the commanding officer responsible for RCMP activities in Ontario, said the RCMP’s 28-member Integrated Market Enforcement Team (TEAM) in Toronto is moving into the OSC’s headquarters in hopes of making better cases against financial criminals.
Mr. Wetston, who spearheaded co-operation between regulators and police forces a couple of years ago with the formation of the OSC’s Joint Serious Offences Team, said putting the teams together is another “concrete step” to fight financial crime.
“This is complex stuff, that’s why we need to work together,” he said, adding that the importance of face-to-face co-operation should not be underestimated.
IMET was established in 2003 and was the subject of a critical report in 2007 by the former Superintendent for Financial Institutions. The Toronto team has operated out of a location north of the city.
IMET opened 13 files in 2012 but didn’t charge anyone. The numbers have improved in the past couple of years, with 11 people charged last year. However, IMET was also behind some high-profile losses on white-collar crime prosecutions, including the 2013 acquittal of former Nortel executives on fraud charges.
Combining forces with the OSC under the same roof “can’t hurt, as IMET effectiveness has been so poor,” said a veteran Toronto securities lawyer.
Mr. White said the RCMP is hoping to make the unit more effective through changes including a single intake for all complaints, and more interaction with the OSC’s financial crime experts.
“Without breaking the model, I think that’s what we are doing by integrating,” he said.
“We are looking to become a lot more pro-active.”
Mr. Wetston said the co-location of police staff and regulators, which is expected to be completed by April 1, will help enforcement teams determine early on whether the cases would be best handed through the regulator’s administrative or quasi-criminal proceedings, or through the RCMP’s criminal powers.
He first raised the issue of trying to obtain wire-tap powers for insider trading cases last year, and said a recommendation has been made to the Department of Justice to make the necessary legislative changes under the Criminal Code.
OSC officials said they have the support of police organizations including the RCMP.
Regulators across the country have had a spotty record on insider trading cases, where evidence is often largely circumstantial.
“Wiretaps have been instrumental in successfully prosecuting insider trading cases in the U.S., and they’re likely to be equally useful here,” said Neil Gross, executive director of the Canadian Foundation for the Advancement of Investor Rights (FAIR Canada).
He noted, however, that the usefulness of wiretaps is limited to cases where the illegal trading continues after regulators become suspicious.
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