David Wilson, the chair of the Ontario Securities Commission, often points out that Canada has 30 securities regulators and law-enforcement agencies all working toward a similar goal. He calls this an "enforcement mosaic."
Critics call it a recipe for confusion, duplication and finger pointing when cases go wrong or nowhere. Delay is routine, and accountability blurred.
Canada has 13 provincial and territorial regulators, as well as several self-regulatory groups that work under them. Each is a silo of knowledge, and they don't always easily share information. Add to that the RCMP, its enforcement program, and provincial and local police across the country and the fragmentation problems grow deeper.
It's why talk is heating up about creating a common regulator, a goal the federal government has pursued since the 1960s. Federal Finance Minister Jim Flaherty has been pushing it, and Ontario Finance Minister Dwight Duncan supports the idea.
A common regulator would streamline the process and cut costs. But experts warn its effectiveness depends on the determination of the people running it. "Unless you're going to create a culture of protection, a national regulator is not a panacea," says investor advocate Ken Kivenko.
Enforcement, many argue, might benefit under a common regulator on the assumption it would improve information sharing, harmonize legislation and make it easier to co-ordinate and co-operate with criminal authorities. Eliminating duplication would lead to cost savings that could be redirected to enforcement efforts.
There are two approaches to creating a common regulator. One is for Ottawa to assert its federal jurisdiction over trade and commerce by creating a national securities act, effectively bypassing the provinces to create a national regulator similar to the U.S. Securities Exchange Commission. It's likely a more effective option, but it would also get strong constitutional pushback from the provinces.
Another proposed model – the one endorsed by Flaherty and Duncan, but resisted by every province but Ontario – would create a council of provincial ministers that gives each province equal clout under a single commission. Law professor Jeffrey MacIntosh warns such an approach is a recipe for disaster.
"Who is really accountable? Nobody in the end ... and it could actually make things worse."
If structured properly, there's no question a national regulator would be part of the enforcement solution. But in the words of one investor advocate: 13 rotten vegetables won't make an appetizing salad.
- Tyler Hamilton