Thursday, May 27, 2010

Constitutional Reference to Supreme Court of Canada on Proposed Canadian Securities Act

The Canadian government has referred its bill to create a national securities regulator to the Supreme Court of Canada for a determination as to its constitutionality:
"Under section 53 of the Supreme Court Act, the Governor in Council can refer important questions of law or fact to the SCC for an opinion. The SCC will then provide an opportunity for interested parties to make written and oral arguments. After considering the question(s) and the arguments of the interested parties, the Court will render an opinion and, to the extent possible, will provide an answer to the question(s) posed by the Governor in Council (...)"

"The Government has referred the following question about the proposed Canadian Securities Act to the SCC: Is the annexed Proposed Canadian Securities Act within the legislative authority of the Parliament of Canada?"

(...)

"The Government believes that the proposed Canadian Securities Act is a valid exercise of Parliament’s jurisdiction, and will argue that position before the SCC. The Government’s position is supported by a large number of existing legal opinions by experts and constitutional scholars"
The Department of Finance has posted background material on the issue, as well as links to the proposed legislation.

Th governments of Quebec and Alberta are furious, as they see the creation of a national securities regulator as an intrusion into the area of provincial powers.

More on the controversy:
  • Flaherty outlines securities watchdog plan (Canadian Broadcasting Corporation, May 26, 2010): "On Wednesday, [federal Finance minister] Flaherty said a single regulator would be better able to fight fraudsters such as Earl Jones and Vincent Lacroix, whose schemes cost investors hundreds of millions in recent years (...) If approved, the new regulatory body would oversee securities trading and serve as a financial watchdog across the country. Canada is the only country in the G20 without a national securities regulator, and Flaherty has called the current system of separate regulators an 'embarrassment' to the country."
  • National securities regulator worth recalcitrant provinces’ fury (Globe and Mail, May 27, 2010): "The Canadian Securities Act that Jim Flaherty introduced Wednesday has infuriated the governments of Quebec and Alberta, who believe Ottawa is messing around in their jurisdictions. The fierce opposition that the two will put up as the legislation is reviewed by the Supreme Court and then debated in Parliament could further damage the Conservatives’ modest hopes in Quebec while simultaneously angering the Alberta base. The Tories have, in the past, alienated one constituency or the other; it is quite an accomplishment to anger both at once. Yet Canada needs a national agency to regulate capital markets. Trades cross borders – not just provincial, but national. New forms of trading are proliferating around the globe. Bank of Canada Governor Mark Carney has voiced the need for a single regulatory regime."
  • Keeping up with Joneses of fraud (National Post, May 27, 2010): "There's a flow chart in the government's back-grounder for its new Canadian Securities Regulatory Authority that shows how the planned single regulator will be, in the words of Homer Simpson, 'Judge Judy and executioner.' Investigations into securities-related criminal matters that are currently handed off to police by the patchwork of provincial securities commissions will be enforced by the new super regulator. Armed with more resources, expertise and a raft of new evidence-gathering tools, this promises to be the Dirty Harry of regulators -- which may be a good thing, depending on whether you think large, vaguely unaccountable bureaucracies should be given the equivalent of a .44 Magnum (...) In his [Minister Flaherty's] view, a national regulator will add the 'pillar that's missing' to Canada's financial edifice. He suggested that cases such as the recent Earl Jones fraud scandal might have been avoided if the new regulator had been in place to protect investors (...)The blatant attempt to cast the existing Balkanized regulatory system in a poor light had the predictable consequence of infuriating Premier Jean Charest, who was in full-on Captain Quebec mode. 'To claim an event like Earl Jones would not have happened if there was a national commission is completely beside the point,' he said."
  • Valeurs mobilières - L'agence unique verra le jour en 2012 - Flaherty dépose son projet de loi qui irrite le Québec [Securities - Single agency will see the light in 2012 - Flaherty introduces his bill that irritates Quebec] (Le Devoir, May 27, 2010): "Pendant que le gouvernement Harper en était hier à présenter son projet de loi sur une commission nationale des valeurs mobilières qui remplacerait ni plus ni moins les agences provinciales par un régime canadien, Québec évoquait rien de moins qu'une «invasion» du fédéral dans un de ses champs de compétence (...) La proposition fédérale met la table à un nouvel affrontement politique, car, en vertu de l'article 92 de la Constitution canadienne, le domaine des valeurs mobilières est de compétence provinciale. Le ministre Flaherty est cependant convaincu que les juges de la Cour suprême, auxquels il devait envoyer le projet de loi hier, lui donneront raison." [While the Harper government was introducing its bill to create a national securities agency that would basically replace the provincial agencies with a national scheme, Quebec was referring to nothing less than a federal invasion of one of its areas of control ... The federal proposal prepares the way for a new political clash, because, under s.92 of the Canadian Constitution, securities fall under provincial jurisdiction. Minister Flaherty, however, is convinced that the justices of the Supreme Court, to whom he would submit the bill yesterday, will agree with him. ]

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posted by Michel-Adrien at 7:30 pm

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