Now that we know how CSA interacts with OSC, let’s look at the provincial regulator’s enforcement powers. OSC has the following Enforcement Powers.

1. Investigative Powers
The OSC can initiate investigations when it suspects violations of securities laws. It may act on:

  • Complaints from the public
  • Market surveillance triggers
  • Referrals from other regulators or law enforcement
  • Whistleblower tips

Key tools:

  • Compel testimony: The OSC can summon individuals to testify under oath during investigations.
  • Demand production of documents: The Commission can require individuals or entities to produce relevant books, records, or electronic files.
  • Search and seizure (with court authorization): The OSC may execute search warrants to obtain physical or digital evidence.
  • Subpoenas: It can issue summonses to individuals to appear or produce documents.

2. Administrative Proceedings
The OSC can conduct hearings before its own Capital Markets Tribunal to resolve violations of securities law. These proceedings are civil (not criminal) but can impose serious penalties.

Possible sanctions include:

  • Cease-trade orders: Prohibiting individuals or companies from trading securities.
  • Registration bans: Permanently or temporarily banning people or firms from acting as registrants or directors/officers.
  • Financial penalties: Fines of up to $1 million per contravention.
  • Disgorgement orders: Requiring violators to return ill-gotten gains.
  • Reprimands or settlement agreements.

Example:
In the Bridging Finance Inc. case, the OSC issued cease-trade and management bans against key executives while investigating misuse of investor funds.

3. Quasi-Criminal Proceedings
The OSC may pursue quasi-criminal charges under the Securities Act in the Ontario Court of Justice. These cases are prosecuted similarly to criminal cases but involve securities-related offences.
Examples:

  • Insider trading
  • Market manipulation
  • Misrepresentation or fraud in offering documents

Penalties may include:

  • Fines of up to $5 million per offence
  • Imprisonment of up to 5 years less a day
  • Or both

The OSC may apply to court for orders to freeze assets, appoint receivers, or compel restitution.
While the OSC can impose administrative penalties (like fines, trading bans, or suspensions), criminal prosecution and imprisonment must go through the criminal justice system. The typical process goes through OSC investigating and gathering evidence. If criminal charges are warranted, the OSC may refer the case to a law enforcement agency (e.g., police or RCMP) and work with Crown prosecutors. If convicted in a criminal court, an individual can be sentenced to jail time.

4. Joint Serious Offences Team (JSOT)
The OSC leads or collaborates through JSOT, a special team formed with:

  • Ontario Provincial Police (OPP)
  • Royal Canadian Mounted Police (RCMP)
  • Ministry of the Attorney General

JSOT focuses on complex securities fraud, often overlapping with criminal activity. It allows the OSC to escalate serious cases into full criminal investigations.

5. Cross-jurisdictional Cooperation
The OSC actively coordinates with:

  • CSA members to share intelligence across provinces
  • CIRO for cases involving registered investment firms
  • International regulators, such as the U.S. SEC and UK FCA
  • FINTRAC in money laundering cases

It uses Memoranda of Understanding (MOUs) to facilitate cross-border investigations.

6. Whistleblower Program
Launched in 2016, this program allows anonymous tips and offers financial rewards of up to $5 million for information that leads to successful enforcement actions.

7. Public Sanctions and Deterrence

  • Names and shames offenders in public rulings, press releases, and enforcement bulletins.
  • Acts as a deterrent and promotes market integrity.