Stephen L. Harris
( Doctoral Thesis) March, 1995
The Political Economy of the Liberalization of Entry and Ownership in the
Canadian Investment Dealer Industry
"... [T]he theoretical justification for regulation is to protect the public interest on the one hand, but on the other hand private interests are equated with the public interest. Thus, private interests can seek the sponsorship of the state
to support their own interests. ...
"In the context of the investment dealer industry... the demand for public support of the industry, in the form of entry barriers and [fixed] commission regulations, can be seen to be argued from the perspective of destructive competition,
concentration of power, efficient capital markets, [and] absence of foreign intervention -- all of which were categorized as being in the public interest. In reality, however, it will be shown that these demands had little to do with the public interest and more to [do] with the industry's private
rent-seeking objectives." (at p. 37)
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So what is the LEGAL NATURE of the
IDA? |
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Well, it
really depends on three things: |
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1) |
WHO you ask. |
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2) |
WHY you ask. |
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3) |
WHEN you ask. |
What the IDA
says to the Press:
|
Brian Awad
ex-IDA Legal Counsel |
"The IDA
is a private organization and can set its own rules."
"...the
IDA is not an arm of the government. We are not acting as an
agency or a delegate of the securities commission." |
|
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IDA called on
constitutional grounds |
09 May 1999 |
|
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Paul C.
Bourque
IDA SVP.,
Member Regulation |
"First, let's get the
facts straight. The only legislative power the provincial governments "delegate"
to the IDA is registration of brokers -- and even that is only delegated in
B.C., Alberta and Ontario. The provincial governments do not "delegate"
securities industry compliance and enforcement." |
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Penalties needed |
03
November 2004 |
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What the IDA says to its Members
|
Investment Dealers Association of Canada |
IDA
By-Law 20.30
(1)
The Association may hold hearings, as set out under this By-law, in
order to ensure compliance with and enforcement of Association By-laws,
Regulations, Rulings and Policies and federal or provincial statutes,
regulations, rulings or policies relating to trading or advising in
respect of securities or commodities. |
|
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IDA By-Law 20.30 |
01 October 2004 |
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What the IDA says
to the Government:
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Joseph Oliver, ex - President of IDA
|
Evidence before the
Senate Standing Committee on Banking, Trade and Commerce |
|
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"The IDA is Canada's only national entity with
delegated responsibility for securities regulation and investor protection."
- Joe Oliver |
02
November 1998 |
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What the IDA says
to the Superior Court:
(when
challenged by an investor)
|
Investment Dealers Association of Canada |
The
IDA is merely, 'an unincorporated voluntary Association of Canadian
Securities Dealers governed by a constitution, bylaws and regulations
which deal with the conduct, management and control of the Association's
affairs. |
|
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Factum of the
Responding Parties, Investors Dealers Association of Canada, Terrance K.
Salman, G.F. Kym Anthony, and Joseph J. Oliver
Christopher Morgis et al., vs. Thomson Kernaghan and Co. Ltd |
Page 5, para. 12 |
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What the Court
has said
|
The Investment
Dealers' Association is a body recognized by the Ontario Securities
Commission, and through which members exercise self-imposed "policing"
powers over one another. Not all investment dealers are members of the
Investment Dealers' Association, but supervisory regulations exist for
all investment dealers, whether or not they belong to the Investment
Dealers' Association. If they do not belong, regulatory supervision
emanates directly from the Ontario Securities Commission. For all
practical purposes the scope of the authority is identical,
whether it is exercised by the Investment Dealers' Association or the
Ontario Securities Commission. |
R. v. Holmes
[1972] O.J. No. 1230, para 6. |
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What the IDA says
on their Web Site:
|
Investment Dealers
Association of Canada |
"The
securities commissions delegate certain aspects of
securities regulation to the Investment Dealers
Association of Canada..."
|
IDA Web Site |
 |
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What the OSC says:
|
Securities Commission
|
"The objective is to
validate reliance on the SRO for
the functions which we have delegated to it."
"The recognition
process is an important one. It helps set clear standards which must be met
by the SRO prior to exercising its delegated authority"
|
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What the OSC
advises investors who file a complaint:
|
Securities Commission
|
The OSC has recognized the Investment
Dealers Association ("IDA") as a self regulatory organization (1995, 18 O.S.C.B.
5293). As such, the IDA has the authority and the jurisdiction over its members
to enforce Ontario securities law
as well as IDA rules,
regulations and by-laws.
As there
are no provisions to circumvent this process, the OSC is unable to consider your
request for a regulatory review of your matter.
|
OSC
letter to Ms. Pamela Reeve |
25 August 2004 |
|
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What the Ontario Information Privacy
Commission says:
|
Order P-30
21
December 1998 |
"...an
organization which, in the view of the institution (OSC),
qualified as an "agency as described in clause 14(2)(a) (of the
Freedom of Information and Protection of Privacy Act, 1987)." "
...
"The
O.S.C. has informally delegated its complaint
investigation function with respect to investment dealers to the I.D.A."
...
|
|
"...all
investigation reports and disciplinary decisions of the I.D.A. and T.S.E.
are filed with the O.S.C. so that the O.S.C. can review them to ensure that
the matters were properly dealt with even though there
is no statutory requirement that this be done."
...
"In the
circumstances of this appeal, the I.D.A. was simply acting
as agent for the O.S.C." |
|
|
Order P-548
07
October 1993 |
"It is clear to me that, if the O.S.C. had itself performed the investigation
into the appellant's complaint and produced a report, the report would fall
squarely within the parameters of subsection 14(2)(a). In the circumstances of
this appeal, the I.D.A. was simply acting as agent for the
O.S.C.,..."
|
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What the Canadian
Securities Administrators say:
|
Canadian Securities Administrators |
Uniform Securities Regulation Proposal |
Self-regulation
S.43, pg.18 |
|
"The CSA (Canadian Securities Administrators) agree that SROs and their staff
should have the same statutory immunity that securities regulatory authorities
enjoy when they exercise powers delegated to them by securities regulatory
authorities. Such an immunity would be provided for under the USL." |
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See also:
OSC/IDA Scandal
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