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The Canadian Securities Administrators 2018/2019 Enforcement Report – Key Highlights

by Natalia Vandervoort and Melanie Zetusian

The Canadian Securities Administrators (the “CSA”) is an umbrella organization of 10 provincial and 3 territorial securities regulators in Canada, which includes the Ontario Securities Commission (“OSC”). The CSA’s mission is “to give Canada a securities regulatory system that protects investors from unfair, improper or fraudulent practices and fosters fair, efficient and vibrant capital markets, by developing a national system of harmonized securities regulation, policy and practice.”[1]

At the conclusion of every fiscal year, the CSA issues a report outlining its enforcement efforts and initiatives throughout the year. In this article, we review the recent CSA Enforcement Report titled Evolving Securities Enforcement for a Digital World for the period between April 1, 2018 and March 31, 2019 (the “Report”), with a particular emphasis on the CSA’s digital and multijurisdictional enforcement initiatives.  

The focus of the CSA in the 2018/2019 fiscal year has been on “enforcing and deterring misconduct amidst the growing digital economy” through “new tools, driving knowledge-sharing and collaboration, and enhancing the skills of enforcement teams across the country.”[2]  The growth of the digital economy has propelled two key initiatives: (1) Operation Cryptosweep; and the (2) Market Analysis Platform (“MAP”).

In April 2018, the North American Securities Administrators Association (“NASAA”)[3] organized a task force called Operation Cryptosweep to commence a coordinated series of investigations into crypto-assets and Initial Coin Offerings (“ICOs”). The President of NASAA stated that “[a] strong culture of compliance should be in place before, not after, these products are marketed to investors.”[4] As of August 7, 2019, Operation Cryptosweep has resulted in 85 enforcement actions related to ICOs or cryptocurrency-related investment products and over 300 inquiries or investigations.[5] Operation Cryptosweep ran concurrently with the CSA’s year-long national crypto-asset awareness program, the objective of which was to warn Canadians of the high risks associated with crypto-assets and ICO investments.[6]   

The MAP is currently being designed to assist CSA members in identifying and analyzing market misconduct through a central data repository and analytics system that will capture a wide array of market and transaction data. Its objectives are to uphold market integrity, identify individuals potentially acting in coordination to engage in misconduct, and access enhanced research into market behavior to facilitate data-driven policy decision-making.[7]

In light of the “size and sophistication of current market practices”,[8] the CSA requires extensive historic records of complex structural data, which demand upgraded technological tools and applications.[9] The new system will collect information, including targeted broker data, into a central data repository to avoid the current “time-lagged piecemeal approach”.[10] The Chair of the CSA commented that “[w]ith the insights we collect from the MAP, all jurisdictions of the CSA will have a consolidated view of the activity taking place across markets.”[11] We look forward to an update on the impact of a centralized data system on securities regulation.

Multijurisdictional cooperation and assistance among securities regulators is important in the context of an increasingly digital and global world. In the 2018-2019 fiscal year, CSA members provided formal assistance to one another in 42 cases and referred 82 files among various jurisdictions for further enforcement action.[12] By comparison, inter-member assistance was provided 88 times and 35 files were referred among the jurisdictions in the 2017-2018 fiscal year.[13]

The Cross-Border Market Fraud Initiative (“the “Fraud Initiative”), chaired by the Alberta Securities Commission, is aimed at eradicating pump-and-dump schemes and targeting perpetrators across national and international borders.[14] It coordinates multijurisdictional responses to emerging pump-and-dump threats, often leading to the issuance of cease-trade orders, freeze orders, trade suspensions, and notices of hearing. The German securities regulator – the Federal Financial Supervisory – has also joined the Fraud Initiative. The Report describes Germany’s entry into the Fraud Initiative as a “significant development in international coordination”, given that pump-and-dump schemes frequently entail companies quoted or listed on stock exchanges in Germany, Canada and the United States.[15] The Securities and Exchange Commission was supported by this initiative when it temporarily suspended the trading of 49 Canadian-based issuers quoted on over-the-counter markets in the United States.[16]

The Report also refers to the Insider Trading and Market Manipulation Conference (“Conference”) as an example of leveraging international enforcement relationships to adapt to the increasing pace of change in Canada’s interconnected capital markets. The Conference was held in Quebec City in September 2018 and was attended by more than 120 guests from 24 organizations and 9 countries, including Canada, the United States, Germany, Japan, and Australia. The purpose of the Conference was to share best practices on investigating and prosecuting insider trading and market manipulation.[17]

In summary, in the last fiscal year, CSA members concluded a total of 94 matters involving 177 respondents.[18] Over half of those respondents (59%) were convicted or admitted responsibility for either fraud (18%) or illegal distribution (41%). There was a total of $77,508,494 of monetary sanctions imposed on respondents. CSA members also commenced 63 new matters involving 172 respondents.[19] Enforcement proceedings commenced for fraud and illegal distribution are at the top of the list, comprising approximately 61% of the allegations made against respondents in the last fiscal year.      

We look forward to further updates on how the above cryptocurrency and multijurisdictional initiatives impact enforcement activities of CSA members.



[1] Canadian Securities Administrators (“CSA”), “Our Mission”, online: <>.

[2] 2018/19 Enforcement Report at 5.

[3] The North American Securities Administrators Association (“NASAA”), founded in Kansas in 1919, represents provincial and state securities regulators in Canada, Mexico, and the United States. Its mission includes protecting, educating, and guiding investors and preserving the integrity of the North American securities industries. NASAA’s duties include licensing stockbrokers, registering certain securities, investigating investor complaints, and enforcing state securities laws. For additional information, see <>.

[4] NASAA, “NASAA Updates Coordinated Crypto Crackdown” (28 August 2018), online: <>.

[5] NASAA, “NASAA Updates Coordinated Crypto Crackdown” (7 August 2019), online: <>.

[6] 2018/19 Enforcement Report at 12.

[7] 2017/18 Enforcement Report at 13.

[8] 2018/19 Enforcement Report at 11.

[9] Provincial/Territorial Council of Ministers of Securities Regulation, Annual Progress Report: January 2016 to December 2016, online: <> (“Annual Progress Report”) at 14.

[10] Annual Progress Report at 14.

[11] CSA, “Canadian Securities Regulators Announce Agreement with Kx to Deliver Advanced Post-Trade Analysis” (13 September 2018), online: <>.

[12] 2018/19 Enforcement Report at 10.

[13] 2017/18 Enforcement Report at 15.

[14] 2018/19 Enforcement Report at 7.

[15] 2018/19 Enforcement Report at 13.

[16] 2018/19 Enforcement Report at 13.

[17] 2018/19 Enforcement Report at 13.

[18] This refers to cases in which a final decision has been issued or a settlement reached.

[19] CSA, 2018/19 Enforcement Report: Evolving Securities Enforcement for a Digital World, (“2018/19 Enforcement Report”) at 15, 17.

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