AMF Enforcement Activity in 2009 - A year successful collaboration

Organization

Montréal – The Autorité des marchés financiers (AMF) today reported on its enforcement of the Securities Act and An Act respecting the distribution of financial products and services in 2009. "In the past year, economic crimes regularly made the headlines. As well, people generally became more aware of the importance of applying exemplary penalties for economic crimes as a deterrent," said Jean
St-Gelais, AMF President and CEO.

The AMF obtained substantial monetary sanctions of $81,577,901. This amount includes administrative penalties imposed in connection with the settlement reached in the asset-backed commercial paper (ABCP) matter in December 2009, which alone accounted for $76,800,000.

The AMF was also able to obtain fines totalling more than $2.8 million, including a fine of over $1 million against Stevens Demers handed down by the Court of Québec in August.

"In many of the actions launched in the past year, we sought penalties in excess of the minimum amounts prescribed by law for deterrent and exemplary purposes," added Mr. St-Gelais.

The legislative amendments announced last fall and contained in Bill 74 will enable the AMF to perform its mission of regulating the financial markets more effectively. Under the amendments, penalties and fines under An Act respecting the distribution of financial products and services are increased and consecutive prison terms may be imposed in the case of serious violations.

Effective collaboration

The past year was marked by significant collaborative efforts between the AMF, various police forces and partners in fraud prevention and response. These include the establishment of an integrated financial information team in May and a joint team to combat economic crimes in September.

With respect to enforcement and combating economic crimes in 2009, the AMF actively collaborated with numerous regulators and police forces, in particular in the ABCP matter and the Carrefour operation in December.

During the year, the AMF reinforced its presence among consumers and stepped up its prevention measures by increasing the number of conferences given by its mobile team and launching a campaign with the theme "Before investing, investigate," featuring TV personality Guy Mongrain.

Enforcement figures

Here are some AMF enforcement figures for 2009:

Charges laid by the AMF

A total of 855 charges:

  • 674 charges for violations under the Securities Act;
  • 181 charges for violations under An Act respecting the distribution of financial products and services.

Individuals and companies sanctioned

A total of 78  individuals sanctioned:

  • 91 individuals and 60 companies sanctioned following a decision by the Québec administrative securities board (BDRVM) or a penal court under the Securities Act;
  • 400 individuals and companies sanctioned for late filing or failure to file insider trading reports;
  • 8 individuals and companies sanctioned in penal court under An Act respecting the distribution of financial products and services;
  • 18 individuals and companies sanctioned for violations under sections 115 and 117 of An Act respecting the distribution of financial products and services;
  • 206 individuals and companies sanctioned or covered by decisions related to registration and the right to practice under An Act respecting the distribution of financial products and services.

Fines, penalties and sanctions

A total of $81,577,901 and more than three and a half years in prison terms:

  • $2,852,050 in fines for failures or violations under the Securities Act;
  • $126,789 in administrative penalties imposed by the BDRVM;
  • $77,237,262 in administrative penalties imposed by the AMF, including with respect to the settlement reached in the ABCP matter;
  • $1,147,300 in fines imposed for late filing or failure to file insider trading reports;
  • $24,250 in fines for violations under An Act respecting the distribution of financial products and services;
  • $190,250 in administrative penalties imposed on individuals or companies for failures or violations under An Act respecting the distribution of financial products and services.

Prison terms of more than three and a half years:

  • a prison term of two and a half years against Stevens Demers;
  • a 30-day suspended sentence against Denis Roy;
  • firm prison terms of 2 months and 12 months against Michel Maheux for contempt of court.

Other data

Decisions rendered in Québec for securities law violations represent one-third of all similar decisions in other jurisdictions in Canada. Almost 95% of decisions handed down by judicial tribunals under Canadian securities legislation in 2009 took place in Québec.

As well, decisions rendered in Québec for securities law violations represent one-third of all related actions launched Canada-wide.

Monetary penalties imposed in Québec represent more than 50% of penalties imposed in Canada.

Illegal distributions were the most common type of violation sanctioned in 2009 in Québec (25 of the 48 cases settled by the AMF).

2009 Highlights

February 2009: Derivatives Act comes into force.

March 2009: AMF launches major proceedings for illegal practice and distributions related to the matter of Flamingo. AMF seeks fines totalling $1.7 million.

May 2009: AMF launches major proceedings for illegal practice and distributions related to the matter of Centre financier Montérégie. AMF seeks fines totalling $2 million.

June 2009: Michel Maheux given 4th prison term for contempt of court.

July 2009: AMF freezes accounts of Earl Jones and assists the Sûreté du Québec with its investigation.

August 2009: Stevens Demers sentenced to two and a half years in prison and fined over $1 million.

September 2009: Pascal Baril, Jacinthe Forest and P.R.A.T.I.C. 2000 inc. found guilty of illegal practice and distributions, and are fined $718,000.

November 2009: Fraud awareness campaign launched under the theme "Before investing, investigate," featuring TV personality Guy Mongrain.

December 2009:

  • Bill 74 assented to and comes into force. The Bill improves financial market regulation, thereby bolstering the confidence of Québec investors and consumers.
  • AMF collaborates with the RCMP's lntegrated Market Enforcement Teams in the Carrefour market manipulation case.
  • The AMF, the Ontario Securities Commission and the Investment Industry Regulatory Organization of Canada announce that they have reached settlements in connection with the investigations into the Canadian asset-backed commercial paper (ABCP) market providing for the payment of $138.8 million in administrative penalties and investigation costs.

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

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