Point of no return: A national securities law and consumers in Canada

Author

John Lawford, Alysia Lau

Organization

Public Interest Advocacy Centre (PIAC)

Published

2012

Summary

The federal government's recent efforts to create a comprehensive federal securities regime essentially reproduced the provincial schemes already in place because they did not start from the right jurisdictional bases. An analysis of consumer law could assist the federal government in identifying the proper bases of federal jurisdiction in securities. In brief, the difference between the consumer interest as market participant (demand side of the market) and the consumer as an individual investor in need of protection from various market actors (traditional "paternalistic" consumer protection) holds the golden key to the correct approach to grounding federal jurisdiction in the securities area. In order to take advantage of this insight, the federal government must split the regulation of securities in two along the lines of the protection of the securities market versus protection of consumers, and only take its own half.

This report outlines a number of areas where provincial regulation of securities markets appears to harm investor confidence in the securities market as a whole in Canada. Some of these include an ability to become a major market issuer via reverse take-over without ever filing an initial prospectus; a lack of enforcement against illegal insider trading; exempt market abuses and the increase in use of and potential widening of the exempt market; confusion over "crowdfunding"; and ignoring to a large extent shareholder democracy developments in the U.S. and around the world.

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OCA Funded Research
This research received funding support through the Office of Consumer Affairs' Contributions Program.

Contact information

Source: Consumer Policy Research Database