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By LegalMatters Staff • Any deceptive or fraudulent activity in connection with the buying or selling of securities is considered securities fraud. Insider trading, which involves the buying or selling of securities based on information that is not shared with the public, is one example.
“Securities fraud is regulated primarily by provincial and territorial securities regulators such as the Ontario Securities Commission, the Autorité des marchés financiers in Quebec and the British Columbia Securities Commission,” says Ottawa criminal lawyer Céline Dostaler. “These regulators enforce securities laws and regulations designed to protect investors and maintain the integrity of the capital markets.”
She says the RCMP and provincial police forces investigate commercial crimes, including financial market fraud.
“Provincial and territorial attorneys-general can bring contraventions of securities laws, as well as Criminal Code violations, before a court,” says Dostaler. “The sanctions available to courts for securities law violations are also more extensive than those available to securities regulatory authorities, including imprisonment.”
She says the penalties for securities fraud can be severe depending on the nature and severity of the offence, as well as other factors such as the amount of money involved and the impact on investors.
“If someone is criminally convicted of securities fraud under s.380 (1) of Criminal Code, the maximum sentence is a 14-year prison term,” says Dostaler. “In addition to criminal penalties, securities regulators can impose administrative sanctions such as fines, disgorgement of profits and restrictions on future trading or participation in the securities market.”
She notes that a report published by an umbrella group for Canada’s provincial and territorial securities regulators states that 758 investor alerts, cautions and warnings were issued between July 1, 2022 and June 30, 2023.
“More than half (422) were related to cryptocurrencies,” says Dostaler. “This total represents a 221-per-cent increase over the previous year when 236 alerts were issued.”