BCN 2007/34 - BCSC Governance of Enforcement Settlement Agreements - Implementation [BCN]

On August 22, 2007 the British Columbia Securities Commission published for comment a proposed change to its governance practices as they relate to enforcement settlements entered into by the executive director (see BCN 2007/27 BCSC Governance of Enforcement Settlement Agreements).

Under the new system, the commission chair will appoint a settlement committee of the board for each settlement being considered by the executive director.  The committee will authorize the executive director to settle within specified parameters.  Under that authority, the executive director and enforcement staff will negotiate the settlement with the other party the same way they do today.

The Commission will implement the new system immediately.

The Commission received two comment letters, both published as an appendix to this notice .

The root of both commenters’ concern appears to be based on a belief that the new system is an adjudicative process.  With this belief, the commenters express understandable concerns about implementing an adjudicative process that denies parties other than staff the opportunity to be heard.

However, as the August notice intended to make clear, the new system is a governance process, not an adjudicative one. The system merely codifies and formalizes the role the chair sometimes now plays in authorizing the executive director to settle, expands it to all enforcement settlements, and transfers the role to the board. None of this turns the existing governance process into an adjudicative one.

Regardless of the system of oversight the commission chooses for authorizing settlements, the fact remains that a settlement is a settlement - both parties must agree to it, or it does not happen. There is no adjudication involved.

Neither will the new system taint any subsequent hearing in a matter where the parties fail to agree to a settlement. As explained in the August notice, a commissioner sitting on a settlement committee will not discuss the matter with any commissioner not on the same committee. If the settlement fails, the commissioners on the committee will not, without the consent of the parties, sit on a hearing panel in the matter.

The commission believes the new system will provide sound governance of the settlement process while preserving most of the advantages of the current system.

After the commission has gained experience with the new system, it will assess the system’s effectiveness and make changes if needed. As part of that process the commission will seek and consider the views of counsel and other stakeholders.

 November 9, 2007

 Brent W. Aitken

 Vice Chair

 Ref:      BCN 2007/27 BCSC Governance of Enforcement Settlement Agreements

This Notice may refer to other documents. These documents can be found at the B.C. Securities Commission public website at www.bcsc.bc.ca in the section Securities Law & Policy: Policies & Instruments.