| TORONTO, March 27
TORONTO, March 27 Canada's largest capital
markets regulator is pushing for an amendment to the country's
Criminal Code that would allow investigators to use wiretaps to
investigate insider trading.
Such a step would give Canadian investigators a tool that
their U.S. counterparts already have, and one that Ontario
Securities Commission (OSC) Chairman Howard Wetston said on
Thursday is needed to successfully prosecute a crime where
proving intent is key.
The OSC is the largest and most influential of Canada's
provincial and territorial securities regulators, and has
jurisdiction over the Toronto Stock Exchange.
"In my opinion, we are missing a key tool that would assist
in more effectively enforcing provisions against insider
trading," he said in a speech to a Toronto business audience.
"Wiretaps would allow us to obtain direct evidence of the
intention - I underline intention - to engage in illegal insider
trading and tipping," he said. Tipping refers to the practice of
passing along sensitive information that could then be used for
The wiretapping would not be done by the regulator itself,
but rather by provincial and federal police that work with
regulators to investigate white collar crimes. Wetston said the
OSC has been in early-stage talks with police about the issue.
Making the change would require lawmakers to add insider
trading and tipping to the list of offenses that can be
investigated with wiretaps.
Canadian regulators have long battled a reputation for being
too soft on white collar crime due to cases such as the Bre-X
gold salting fraud in the 1990s, which cost investors billions.
Nobody was charged with fraud in the cause, and the lone figure
who was charged with insider trading was acquitted.
More recently, regulators were criticized for their
oversight of Sino-Forest Corp, one of several North
American-listed companies with Chinese operations whose
accounting disclosure practices came under scrutiny.
The OSC has tried to turn that reputation around in recent
years by beefing up technology and hiring more enforcement
staff. Last year it launched the Joint Serious Offences Team
(JSOT), an partnership of the OSC and police aimed at targeting
fraud, market manipulation and other such offenses.
(Editing by Jeffrey Hodgson; and Peter Galloway)