BC Securities Commission Announces it will Begin Issuing Administrative Penalties by Notice for Minor Infractions
On April 27, 2023, the BC Securities Commission (the “Commission”) announced that it will begin imposing administrative penalties for certain infractions of investment market rules without holding a panel hearing. The Commission’s authority to do so is grounded in the administrative penalty imposed by notice (“APIN”) provisions at sections 162.01 to 162.06 of the BC Securities Act that came into effect in March 2020.
A summary of the APIN enforcement tool and how the Executive Director intends to use it are set out in the Commission’s BC Notice 2023/03. Highlights include:
- Eligible Contraventions: Currently, the Executive Director may only issue a notice requiring a person to pay an administrative penalty if they are of the view that the person violated the regulations (which includes instruments and rules) or contravened a previous decision of the Commission or Executive Director. The APIN process is not available for contraventions of the provisions of the Securities Act.
- Amount of APIN: The maximum administrative penalty that may be issued under the APIN process is $100,000 per contravention for an individual, and $500,000 per contravention for an entity.
In determining the amount of the penalty, the Executive Director must consider the following factors: (i) the person's past conduct; (ii) the seriousness of the conduct; (iii) factors that mitigate the person's conduct; (iv) the need to demonstrate the consequences of inappropriate conduct to those who access the capital markets; (v) the need to deter those who participate in the capital markets from engaging in inappropriate conduct; (vi) orders made by the commission in similar circumstances in the past; (vii) any other matter relevant to the public interest
- Notice of Administrative Penalty: If they consider that a person has violated a regulation or decision, the Executive Director will deliver written notice to that person that sets out: (i) each contravention, (ii) the amount of the administrative penalty assessed for each contravention, and (iii) the date by which the person must either pay the penalty or dispute it. The Executive Director is not required to provide a person the opportunity to be heard before issuing the notice.
- Disputing a Notice: A person may dispute a notice to pay an administrative penalty within 30 days of receipt by giving written notice to the Executive Director requesting an opportunity to be heard. After a hearing, the Executive Director must issue an order: (i) confirming whether or not the person committed the contraventions set out in the notice, and (ii) if the contraventions are confirmed, reducing, revoking or confirming the penalty set out in the notice.
- Publicity: Undisputed notices and penalties imposed after a hearing will be made public and published on the Commission website.
- Appeals: If a penalty is imposed after a hearing, affected parties may request that the Commission review the Executive Director’s decision. They may also appeal the panel’s decision to the BC Court of Appeal.
- Other Tools: For more serious misconduct that requires a penalty higher than what is available under the APIN provisions, or additional orders to protect the public from harm (such as bans or restrictions on market participation or repayment of illicit proceeds), the Executive Director will continue to seek orders from the Commission after a hearing under s. 161 of the Securities Act.
APINs are just one of many tools the Commission has available to encourage compliance with securities laws in BC. For more information on APINs or other securities law issues in Canada, contact a member of our Securities Litigation Group.
R.S.B.C. 1996, c. 418.