CANADA has long had a reputation as a security fraudster’s playground, where misdeeds go undetected and unpunished and investors must take extra care. David Dodge, then governor of the central bank, provoked outrage in 2004 when he said foreigners perceive Canada as a “Wild West” in terms of the degree to which financial rules and regulations are enforced. At the time Mr Dodge was advocating a single national securities regulator, which despite the efforts of successive federal governments has yet to be created. But stung by the criticism, Canada’s 13 separate securities commissions—one for each province and territory—have at least been trying much harder to get to grips with securities fraud.

The regulators, often working in concert with the police, the government or the courts, have experimented with all kinds of fraud-fighting schemes. They have set up multi-agency enforcement teams, brought in no-contest settlements akin to those used by America’s regulators and allowed institutional investors to finance lawsuits on behalf of aggrieved investors in exchange for a cut of the proceeds. The results to date have been underwhelming....Continue reading