An effective regulatory enforcement regime focuses on protection and the prevention of harm to investors. Securities regulators, in partnership with other agencies, work to deter, detect, and prosecute securities law violations.
Canadian securities regulators investigate suspected securities-related misconduct, such as breaches of obligations by registered individuals who sell investments to investors, illegal sales of investments, and other securities law infractions. Although some cases are relevant to more than one category, the following list explains the typical cases that securities regulators see in their enforcement work.
In disclosure cases, the victims are typically company shareholders. Continuous disclosure review programs undertaken by CSA members aim to ensure that investors have accurate and timely information about public companies on which to base their investment decisions. A review that uncovers suspected misconduct may result in an enforcement case against a company or management of the company.
Investment fraud involves deceit and dishonest deprivation. To learn how to recognize, reject, and report fraud, spend time in InvestRight.org’s Fraud Awareness section learning about the warning signs and understanding the techniques you can use to avoid falling victim to an investment fraud.
An illegal distribution is a sale or attempted sale of securities, usually of a shares are subject to resale restrictions and may not be able to be sold for a period of time.’]private company[/simple_tooltip] to investors that do not comply with registration, trading, or disclosure requirements. Some illegal distributions also constitute fraud.
Frequently, a person who promotes an illegal distribution is not registered in the securities industry. The sellers often misrepresent the investment they are selling to investors. For this reason, it is important to do a background and registration check prior to giving anyone your money.
Illegal Insider Trading
Illegal insider trading involves buying or selling the securities of a publicly traded company while possessing undisclosed material information – financial results, operational events, etc. – about the company. Illegal insider trading includes related violations such as providing information to a person outside the company, or “tipping”, and the “tipped” person using the information to trade shares of the company.
Market manipulation involves efforts to artificially increase or decrease the price of a company’s shares. Examples of market manipulation include high closing activities, creating false trading volume, and “pump and dump” schemes.
This type of misconduct occurs when a registered person or company violates securities laws, fails to register when required to do so, or fails to adhere to the conditions of a registration exemption. Go to our Advisor Misconduct page to find out how to recognize and report illegal or unethical behaviour.