June 4, 2015 Securities Organization Public Contracts

Montréal - The Autorité des marchés financiers (the "AMF") today reported on its enforcement of the laws governing the Québec financial sector in 2014. A total of 64 individuals and 38 firms were sanctioned for various offences under the laws administered by the AMF last year, and $8,708,753 in fines, penalties and sanctions were imposed further to AMF intervention.

Illegal distributions were the most common type of offence prosecuted in 2014 in Québec, with 29 suits brought against 62 individuals and 12 firms, and nine freeze orders issued against 28 individuals and 17 firms on account of suspicious distribution activities.

The report contains other noteworthy data: AMF investigation and prosecution teams generated more than one third (38%) of all securities-related proceedings launched by securities regulators in Canada, i.e. 40 out of 105 proceedings. Moreover, close to 50% of all securities-related proceedings against individuals in Canada were launched by the AMF (46%). As well, 18 of the 48 illegal practice cases concluded by securities regulators in Canada were based in Québec (38%). Lastly, of the 85 individuals and firms targeted by cease trade and/or freeze orders, 45 were involved in proceedings launched by the AMF (53%).

"Our investigation and prosecution teams work tirelessly to uncover financial misconduct," noted Louis Morisset, AMF President and CEO. "We're doing our utmost to deliver a detection, investigation and prosecution program based on the highest standards in order to protect investors and deter offenders."

Cybersurveillance

Since 2010, the AMF has been the only regulator in Canada with a dedicated cybersurveillance unit. Made up of four investigators and two technicians, the unit deals with an average of one hundred cases per year, essentially by detecting suspicious activities on the Internet. Using specialized software, they track down individuals and businesses that offer financial products to Québec investors on the Internet without authorization to do so. Investigators sometimes infiltrate operations so as to collect and share important information with police forces.

Close to five years after the start of its operations, the AMF's cybersurveillance unit has targeted close to 400 cases, almost half of which resulted in action taken by the AMF against individuals or businesses. The AMF's cybersurveillance activities have also produced:

• 30 press releases and warnings to the public;
• the transfer of 62 files to AMF Litigation;
• 77 warning letters sent to individuals or businesses;
• the transfer of 8 cases to other regulators and police forces.

Enforcement partnerships

The AMF works closely with various police forces to gather and develop intelligence about illegal activity in the financial markets. Such partnerships also help detect and prevent fraud and provide police forces and regulatory organizations with crucial information for launching or pursuing investigations.

The AMF is a member of three integrated teams operating at various levels to combat financial wrongdoing:

• The Joint Securities Intelligence Unit (JSIU), the Équipe des crimes contre les marchés financiers (financial market crime unit) and the Integrated Market Enforcement Team (IMET).

These teams, which are made up of over 50 members of the Royal Canadian Mounted Police, the Sûreté du Québec and the AMF, collaborate in the fight against financial crime through the collection and sharing of information and expertise, and the co-ordination of investigations into financial market fraud.

In addition, the AMF participates every year in international meetings, and exchanges information with the investigation departments of regulators from around the world to discuss the latest fraud detection practices and consolidate its leadership in the fight against financial crime.

Unité spécialisée de soutien aux enquêtes (specialized investigation support unit)

Since 2012, the AMF has been able to draw on a team charged with decrypting and analyzing the latest financial products available on the market.

Made up of four analysts, the team scrutinizes the issues and risks involving financial markets, market participants and the new and often complex products offered to investors. It thus improves the effectiveness of crime detection, investigation and prosecution processes, while fostering the transfer of knowledge among AMF staff on an ongoing basis.

Examples of mandates carried out by the specialized unit include:

• Risks and issues related to virtual currencies;
• Support for an investigation involving complex financial engineering;
• Analysis and monitoring of Québec's carbon market;
• Analysis of the implications of flow-through share financing in Québec.

"All these activities clearly illustrate the efforts and initiatives we're dedicating to fighting financial crime," said Jean-François Fortin, Executive Director, AMF Enforcement. "We will continue fighting financial crime with ever more tenacity."

2014 Enforcement Highlights

Charges laid by the AMF in 2014:

A total of 984 charges, including the following:

• 938 charges for violations under the Securities Act;
• 24 charges for violations under An Act respecting the distribution of financial products and services ("Distribution Act");
• 21 charges for violations under the Derivatives Act.

Individuals and firms sanctioned in 2014:

A total of 64 individuals and 38 firms sanctioned in 2014:

• 41 individuals and 14 firms sanctioned following decisions by the Québec decision and review bureau ("Bureau") or a penal court for violations under the Securities Act;

Fines, penalties and sanctions in 2014:

A total of $8,708,753 was imposed as follows:

• $7,161,820 in fines imposed for violations under the Securities Act /Derivatives Act;
• $1,189,913 in administrative penalties imposed by the Bureau for violations under the Securities Act or the Derivatives Act;
• $127,020 in administrative penalties imposed by the AMF;
• $43,000 in fines for violations under the Distribution Act;
• $187,000 in administrative penalties imposed by the Bureau for violations under the Distribution Act.

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

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