The Canadian Securities Administrators (CSA) published its 2021-2022 Enforcement Report, outlining the actions CSA members undertook in the past year.

Their efforts include issuing 236 investor alerts warning the public about harmful and illegal activity, 61 cease trade and asset-freeze orders were issued during the year and 44 individuals and 13 companies were banned from participating in capital markets.

In addition, the CSA discusses its members’ efforts to clarify and enhance regulation related to crypto-assets. They also say seven individuals received a combined total of 15.4 years of jail time for securities related transgressions.

Repeat offenders 

Regulators also dealt with eight recidivists during the year – those who are repeat offenders being sanctioned for breaching securities laws after previously being sanctioned. Three were prosecuted in court and received jail sentences ranging from 18 to 36 months.

In looking at threats the CSA says are sophisticated and evolving, they discuss initiatives to enhance research techniques for analyzing crypto asset trading, and a framework developed by regulators to establish digital forensic laboratories in a cloud-based environment. They have further enhanced platforms for detecting suspicious trading activity and analyzing market abuse. CSA members also conducted training on novel technology and analytics issues during the year.

“Disruption (of illegal activity) involves intervening as soon as possible to protect investors and minimize harm,” writes the CSA’s outgoing chair Louis Morisset. Morisset is also the president and CEO of the Autorité des marchés financiers. “This report outlines several tactics used to either disrupt potentially harmful or illegal activity or to prevent it.”

A multi-year penny stock scheme 

He adds that in the past fiscal year, several CSA members were part of a 20-country investigation that resulted in the Securities and Exchange Commission (SEC) charging defendants involved in a multi-year penny stock scheme that generated more than USD $194-million in illicit proceeds. Staff have engaged in virtual investigative training and have collaborated with law enforcement and the Canadian Anti-Fraud Centre

Although they admit in the report that imposing monetary sanctions and collecting those sanctions are entirely different matters, they also say more than $15.5-million in sanctions and administrative penalties were levied during the year. Regulators also ordered $14.9-million paid in restitution, compensation and disgorgement.