March 29, 2017 Organization

Montréal – The Autorité des marchés financiers (the “AMF”) today reported on its enforcement of the laws governing the Québec financial sector in 2016. In the past year, AMF teams developed new tools to further enhance their detection capabilities and reaped the benefits of the tools refined in recent years.

Primary objective: deter wrongdoing

Last year, 158 individuals and firms were sanctioned for various offences under the laws administered by the AMF. In all, $8,786,175.68 in fines and administrative penalties were imposed further to AMF interventions.

“Our enhanced detection capabilities, resulting mainly from the refinement of our surveillance tools, as well as our ability to obtain stern sanctions that include prison terms, contribute to deterring individuals and firms from violating the laws that we administer,” said AMF President and CEO Louis Morisset. “In 2016, for instance, seven individuals were imposed prison terms totalling 138 months at the conclusion of the penal proceedings we undertook.”

Moreover, in criminal matters, three individuals were sentenced to prison terms totalling 156 months at the conclusion of proceedings involving the Unité d’enquête sur les crimes commis sur les marchés financiers (financial market crime unit), in which the AMF collaborates with the Sûreté du Québec and the Director of Criminal and Penal Prosecutions. “The message is simple: Financial crime is very serious and must be effectively sanctioned,” added Mr. Morisset.

Fighting illegal insider trading is top priority

Fighting illegal insider trading is a top priority for the AMF. “In recent years, we have continued to improve our detection and investigation capabilities, mainly through new technologies, and our results have improved. We intend to pursue our efforts to contribute to further containing the impact of market abuse that only undermines investor confidence,” said Jean-François Fortin, Executive Director of Enforcement at the AMF.

Administering laws, an ongoing challenge

The AMF administers several laws, including An Act respecting the distribution of financial products and services (the “Distribution Act”), the Securities Act, the Derivatives Act and the Money-Services Businesses Act (the “MSBA”). The context in which our teams operate is constantly evolving, primarily because of the types of financial products and services being offered, market globalization, the tactics and schemes being used by fraudsters and technological advances in communications. This situation frequently leads to the management of evidence that is complex and voluminous. “In the past year, our teams have also shown agility in adapting our work as public prosecutors to the issues raised by the Jordan decision,” added Mr. Fortin.

A promising new tool

In 2016, the AMF added an important component to its enforcement arsenal: a whistleblower program. Through this program, some whistleblowers were able to confidentially share information to which our investigators would otherwise not have had access. These contributions are highly valuable to the AMF. “To date, our program has generated 49 reports of wrongdoing, 28,6% of which led to the opening of an investigation. It is important to mention that all the reports received are valuable, if not for an investigation, then for information and detection purposes,” said Mr. Fortin. “In light of the results to date, we are confident that our whistleblower program will enable us to detect more infractions, to intervene earlier and to minimize the consequences of infractions for victims,” he concluded.

Watch this video clip This link will open in a new window to learn more about law enforcement work at the AMF.

Enforcement in 2016: a few statistics

Over the past year, the AMF launched 28 lawsuits before the Court of Québec or the Tribunal administratif des marchés financiers (the “Tribunal”) against 55 individuals and firms for various offences under the laws it administers. The following charges were laid:

• 552 charges for offences under the Securities Act or the Derivatives Act;
• 10 charges for offences under the Distribution Act;
• 21 charges for offences under the MSBA.

In 2016, illegal distributions were once again the most common category of offence identified and sanctioned in Québec. The AMF was the most active regulator in Canada in this regard, bringing 14 lawsuits against 33 individuals and firms and completing 27 lawsuits against 55 individuals and firms. The AMF was also active in cases of market manipulation and illegal insider trading, with five filed lawsuits against 10 individuals and firms, and four completed lawsuits against 14 individuals and firms.

The AMF also obtained nine freeze orders against 59 individuals and firms. Freeze orders are issued during an investigation to protect assets and prevent them from being transferred or dissipated, as often they may benefit investors. In addition, the AMF obtained orders against 45 individuals or firms to cease certain regulated activities, to cease acting as an officer or director, or to cease trading in securities.

Fines and administrative penalties imposed in 2016

A total of $8,786,175.68 in fines and administrative penalties was imposed in 2016:

• $6,979,143 in fines imposed for offences under the Securities Act or the Derivatives Act;
• $656,401 in administrative penalties imposed by the Tribunal for offences under the Securities Act or the Derivatives Act;
• $832,211.68 in fines imposed for offences under the Distribution Act;
• $207,020 in administrative penalties imposed by the Tribunal for violations under the Distribution Act;
• $98,400 in fines and administrative penalties imposed for offences and compliance failures under the MSBA;
• $13,000 in administrative penalties imposed by the AMF;
• 11,035 hours of compensatory work were performed by 15 offenders;
• One offender chose to pay his fines with a prison term and was sentenced to 729 days in prison.

The Autorité des marchés financiers (the “AMF”) is the regulatory and oversight body for Québec’s financial sector.

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