A Matter of Voice: The Case for Abolishing the 30 percent Rule for Pension Fund Investments

Pension fund managers have devised ways to effectively skirt the rule that limits them to acquiring no more than 30 percent of the shares eligible to vote for the directors of a corporation. It’s time for regulators to enforce the rule or eliminate it entirely, thereby giving pension funds a voice commensurate with their equity stake.Canadian pension security, Canadian pension funds

Financing of Litigation by Third-Party Investors: A Share of Justice?

This article addresses the issue of the funding of civil litigation within the framework of access to justice and the normative goal of increasing access to the civil justice system. The author critically analyzes and cautiously advances the case for the recent development of the financing of litigation by third-party investors. The argument is that investor financing has the potential to increase access to the civil justice system by ameliorating the economic barriers to litigation. The author evaluates investor financing against existing public and private models of financing litigation such as legal aid plans, litigation subsidy funds, and contingent fee arrangements. The doctrines against maintenance and champerty, which prohibit third parties from providing financial assistance to litigants, are reviewed and analyzed in order to assess the enforceability of financing agreements between plaintiffs and investors. The author then examines the market that is likely to develop for the financing of litigation and analyzes regulation that may be required to protect investors and plaintiffs. The author evaluates policy concerns in relation to the wide-spread availability of investor financing and concludes that such concerns are either misguided or can be addressed by implementing appropriate regulatory safeguards

Enforcement Effectiveness in the Canadian Capital Markets

This paper focuses on the fundamental principles underlying effective enforcement by regulators. In particular, this paper analyzes the critical role of the criminal law and judges in effectively addressing capital markets misconduct. It also analyzes how securities regulators can best structure the wide discretion that is afforded to them in designing enforcement strategies and policies that are effective, fair, transparent and accountable. This study also examines the current allocation and division of enforcement responsibilities in respect of the capital markets amongst the numerous entities involved and explores contentious issues related to the current overlapping and concurrent jurisdiction. Finally, this study examines the issue of data and in particular, data comparisons on enforcement effectiveness with the United States

Will Canada Step Up? Improving Enforcement in the Canadian Capital Markets

The article offers information on a final report on Canadian securities laws released by the Task Force to Modernize Securities Legislation in October 2006. One study found that the cost of equity capital is 25 basis points higher in Canada than in the U.S. It cites the potential for strong enforcement of securities laws to enhance the credibility of the capital markets. The recommendations of the task force on the investigation and adjudication of capital market offenses are enumerated

The Capital Markets Perspective on a National Securities Regulator

For over three decades, there have been numerous attempts, both federal and provincial, to create a national securities regulator for Canada. In the spring of 2010, the federal government tabled a draft Canadian Securities Act that would create a national securities regulator and referenced the draft legislation to the Supreme Court of Canada for a determination of Parliament’s constitutional authority to enact such legislation. The Supreme Court is expected to hear the reference in April 2011. This article seeks to provide an empirical foundation from a capital markets perspective to guide the discussion and debate on the constitutionality of a national securities regulator. an analysis of the relevant academic literature, the investing patterns of Canadian retail and institutional investors, and a changing global regulatory environment indicate the necessity of a national securities regulator for Canada at this time. While the constitutionality of federal capital markets regulation has yet to be determined, this article provides an empirical footing to ground the Supreme Court’s forthcoming analysis

Local and Regional Interests in the Debate on Optimal Securities Regulatory Structure

In considering optimal securities regulatory structure, it is important to determine whether distinctive local and regional capital markets exist. If so, they should be taken into account. A capital market is comprised of issuers and investors. In respect of issuers, this study finds that local infrastructures for capital raising (LICRs) exist for certain industries and levels of market capitalization. An LICR is defined as a geographic region where there is a critical mass of issuers of a certain industry type or level of market capitalization; this allows local securities regulators and professionals (such as investment bankers, lawyers and accountants) to develop an expertise and respond to the needs of such issuers. This study finds that Alberta hosts an LICR for oil and gas, B.C. hosts an LICR for micro-cap issuers, and Ontario hosts an LICR for financial services. Certain LICRs exist in more than one province: Both B.C. and Ontario host LICRs for mining; Ontario, Quebec and B.C. for communications and media; Ontario and Quebec for life sciences; and B.C., Alberta and Ontario each host an LICR for small cap issuers. However, the existence of LICRs for certain industries does not allow us to conclude that the economic activity associated with these industries is local to host provinces or that host provinces have distinct local interests in the capital markets regulation or general regulation of those industries. The activities of issuers concentrated within an LICR have an impact outside the geographic boundaries of the province that hosts and regulates the LICR. Other provinces may have an interest equal to that of the regulating province, given investor location and the importance of those industries to the economies of other provinces, as bome out by Gross Domestic Product (GDP) data. Having found that LICRs for certain industries and levels of market capitalization exist in Canada, the issue that follows is whether provincial securities commissions that host an LICR identified in this study are responsive to that infrastructure in a manner that is different than other provincial securities commissions that do not host that LICR