The British Columbia Securities Commission (BCSC) announced April 27 that it will begin imposing administrative penalties for less serious violations of investment market rules without holding a hearing before a panel of commissioners. The power to impose administrative penalties without a panel hearing is one of several new powers given to the commission following March 2020 amendments made to the province’s Securities Act.

The maximum penalty it can impose this way is $100,000 per violation for individuals or $500,000 per violation for companies. Comparatively, the BCSC says the maximum penalty it can impose through an adjudicated panel hearing is usually $1-million per violation.

The Administrative Penalties Imposed by Notice describes aspects of the new enforcement tool and how the regulator’s executive director intends to use it.

“When misconduct requires a higher penalty or additional orders, such as bans or restrictions on market participation or repayment of illicit proceeds, the executive director will continue to seek orders from the commission through a panel hearing,” the BCSC states.

“The amount of the administrative penalty imposed by notice will depend on the specific facts and circumstances of each particular contravention. The executive director will consider all relevant factors, including the person’s past conduct, the seriousness of the conduct, mitigating factors and the need to deter those who participate in the capital markets from engaging in inappropriate conduct.” 

They add that affected parties will be able to request a hearing and review of any decisions. Panel decisions can also be appealed to the B.C. Court of Appeal

“Imposing an administrative penalty by notice is just one enforcement tool the executive director may use to encourage compliance with securities laws,” the BCSC notice states. “This tool sits on a spectrum of administrative enforcement that includes issuing a warning letter at one end and commission order for market-related bans, disgorgement and monetary penalties after a hearing at the other end. This tool will allow the executive director to efficiently and effectively respond to contraventions where it is not in the public interest to seek larger sanctions and bans.”