Montréal - The Autorité des marchés financiers (the "AMF") today reported on its enforcement of the laws governing the Québec financial sector in 2015. Over the past year, the AMF continued to step up its detection and prevention efforts and develop new technology tools to further enhance its efficiency.
"We are more determined than ever to ensure that those who violate the laws we administer are sanctioned. They significantly erode the confidence that is fundamental to effective market operations, and their behaviour cannot be tolerated," said Louis Morisset, AMF President and CEO. Last year, 141 individuals and firms were sanctioned for various offences under the laws administered by the AMF. In all, $8,742,876 in fines, penalties and sanctions were imposed further to AMF interventions.
The AMF ensures that its interventions, the results of which are made public, have a deterrent effect on those who may be tempted to sidestep the law. "Illegal distributions, fraud and misappropriation of funds are all examples of serious offences that must be severely sanctioned, as their impact on victims is often devastating," Mr. Morisset added.
In 2015, the AMF obtained major court-ordered sanctions. In one case in particular, the Court of Québec imposed a six-month prison term and a $419,220 fine on Alain Côté as well as a $382,000 fine on the company ACGI inc. for illegal distributions. In another lawsuit filed by the AMF, the Court imposed fines of $1,000,000 on Jacques Rancourt and Guylain Pelletier whose illegal distributions of the securities of Véhicules Nemo inc. caused 27 investors to lose $420,000.
2015 Enforcement highlights
The 2015 enforcement results exemplify the AMF's dedication to its mission of protecting the public.
Over the past year, the AMF launched 51 lawsuits before the Court of Québec or the Bureau de décision et de révision ("Bureau") against 114 individuals and firms for various offences under the laws it administers. The following charges were laid:
- 632 charges for offences under the Securities Act and the Derivatives Act;
- 101 charges for offences under An Act respecting the distribution of financial products and services;
- 19 charges for offences under the Money-Services Businesses Act.
Illegal distributions were the most common category of offence identified and sanctioned in Québec in 2015. The AMF was the most active regulator in Canada in this regard, bringing 19 lawsuits against 47 individuals and firms and completing 38 lawsuits against 87 individuals and firms. The AMF was also active in cases of market manipulation and illegal insider trading, with six filed lawsuits against 21 individuals and firms, and eight completed lawsuits against 12 individuals and firms.
The AMF also obtained 13 freeze orders against 45 individuals and firms involving approximately $5.4 million. 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 16 orders to cease certain regulated activities, to cease acting as an officer or director, or to cease trading in securities.
Fines, penalties, sanctions and prison terms imposed in 2015
Total fines of $8,742,876 were imposed in 2015:
- $5,690,306 in fines imposed on 84 individuals and firms for offences under the Securities Act and the Derivatives Act;
- $877,894 in administrative penalties imposed by the Bureau on 23 individuals and firms for offences under the Securities Act or the Derivatives Act;
- $1,147,926 in fines imposed on five individuals and firms for offences under An Act respecting the distribution of financial products and services;
- $128,250 in administrative penalties imposed by the Bureau on 22 individuals and firms for compliance failings under An Act respecting the distribution of financial products and services;
- $13,500 in fines and administrative penalties imposed on three individuals and firms for offences and compliance failings under the Money-Services Businesses Act;
- $885,000 in administrative penalties imposed by the AMF.
A six-month prison term was handed down on one person. In addition, a prison term of five years and three months was ordered on two individuals in connection with criminal cases on which the AMF, police forces and other public prosecutors collaborated.
Deterrence of illegal insider trading and success of our innovative technologies
"The AMF has made deterring illegal insider trading a top priority. This is a serious offence that has a profound impact on market integrity," said Jean-François Fortin, Executive Director, AMF Enforcement. In 2015, the AMF launched or concluded several penal suits, including one involving Renée Roy,The respondent should not be confused with Renée Roy who holds certificate No. 195016 in damage insurance and is attached to the firm Alpha, Compagnies d'assurances inc. who was fined $60,000, the equivalent of double the profits she could have earned as a result of trading in a reporting issuer's securities while in possession of privileged information. In another case, Carl Larivière was fined $89,000 for trading in securities and making a similar recommendation to other persons after he obtained privileged information regarding an acquisition.
Several other insider trading cases are under way, including, in particular, one of tipping involving a former executive assistant to a senior officer of a reporting issuer. In this case, the AMF executed search warrants, succeeded in freezing close to $2 million while the investigation was in progress, and laid charges against seven individuals.
AMF teams are constantly developing and improving the tools that enable them to more effectively identify suspicious market transactions. It is thanks to these internally designed tools that the AMF was able to uncover the transaction trails in these cases.
Collaboration with police forces
The Asim Ahmed case is an excellent example of effective co-operation between the AMF, the other members of the Canadian Securities Administrators (CSA) and police forces. After freezing the respondent's Québec assets, the AMF asked the Ontario Securities Commission to freeze his relevant accounts in Ontario. Then, faced with what appeared to be a Ponzi scheme, the AMF forwarded the case to the organized financial crime investigations unit of the Sûreté du Québec (SQ), made up of members from the SQ and the AMF. The Director of Criminal and Penal Prosecutions subsequently launched criminal proceedings against Asim Ahmed, who pleaded guilty to six charges under the Criminal Code of fraud, money laundering, forgery and use of forgeries, and was sentenced to four years in prison.
The Ahmed case also highlights the involvement of various AMF teams in the investigation process. Mr. Ahmed's suspicious activities were first brought to light by the AMF's cybersurveillance team whose experts handle an average of 100 cases each year.
Investor warnings: An effective prevention tool
Last year, the AMF issued 15 investor warnings urging consumers to be cautious about the activities of certain persons or firms and fraudulent schemes.
One such investor warning was issued concerning binary options. After noticing a spike in reports about this type of option offered on web-based trading platforms, the AMF intervened quickly to alert the public about the risks, fraud in particular, associated with these options. It compiled a list, which was updated regularly, of binary option trading websites operating in Québec. The results of this initiative were shared in several investor warnings. This important work is part of the CSA's efforts in relation to the marketing of these options.
The Autorité des marchés financiers (the "AMF") is the regulatory and oversight body for Québec's financial sector.
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