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Originally published: February 2, 2017
Jeff Kehoe is the Director of Enforcement at the Ontario Securities CommissionOntario Securities Commission An independent Crown corporation that is responsible for regulating the capital markets in Ontario. Its mandate is to provide protection to investors from unfair, improper or fraudulent practices, to foster fair and efficient capital markets and confidence in capital markets, and to contribute to the stability of the financial system and the reduction of systemic…+ read full definition (OSCOSC See Ontario Securities Commission.+ read full definition). The Investor Office recently sat down with Jeff to discuss his background, the role of the Enforcement Branch and his current priorities.
Early in my career I worked as a crown attorney dealing with criminal matters, including prosecuting murder and other serious cases. I then moved on to the Department of Justice where I worked on constitutional cases. That’s where I really started to get interested in white collar crime issues.
From there I went to work for the InvestmentInvestment An item of value you buy to get income or to grow in value.+ read full definition Industry Regulatory Organization of Canada. I started as Enforcement Counsel, then became Director of Litigation and finally Vice President of Enforcement. During that time I regularly got to work with the OSC on many files. I also really started to understand the importance of investor protection. I joined the OSC as Director of Enforcement in October 2016, and I think all of my past experiences helped build the skills that I bring here.
On a personal note, in my spare time I’m a stunt pilot. It’s something I enjoy doing, as not only do I get to throw a plane around in all sorts of positions, but it’s also a form of meditation for me. You can’t think about anything else when you’re upside down in a plane. You have to be in the moment, and it’s really a wonderful feeling.
On the role of the Enforcement Branch…
We have a strong investor protection mandate at the OSC, and that’s something that I am hoping to build upon.
The role of the Enforcement Branch at the OSC is to take complaints that come to us – through other agencies, the police, other regulators or the public – and investigate the complaint to determine if a violation of securities laws has occurred.
Our case assessment department will review the complaint and look at a couple of things. First, they’re looking to see if there is indeed a violation of the rules. This could be rules established under the Securities Act, the CommodityCommodity A raw material that trades in large amounts on a stock exchange. For example, grain, gold, and oil.+ read full definition FuturesFutures A derivative contract that commits you to buy or sell a commodity, currency or stock market index at a set price on a set date in the future. Unlike an option, you can’t change your mind later; you must do what your contract says you will do.+ read full definition Act or other related legislation.
Then, we look at the harm. We prioritize cases that pose the highest risk to investors and we investigate them. And just like you see on TV, we have trials with lawyers on both sides, we put forward the evidence, we have cross-examinations and then a panel of three Commissioners decide whether we have proved our case.
On his current priorities…
As I settle into my new job I’m looking at whether we’re investigating the right cases and whether we’re doing so in the most efficient way.
We try to investigate cases that send a strong regulatory message around the importance of protecting investors. One priority area, for example, involves seniors. I consider some seniors a potentially very vulnerable group in our society, so I would like us to explore cases that would ensure we’re sending a strong regulatory message by protecting some of the most vulnerable participants in the capital marketsCapital markets Where people buy and sell investments.+ read full definition.
I’m also looking to take on different types of cases. I will be working with the various branches within the OSC, including the Investor Office, to identify high-risk areas that may negatively impact investors and capital markets.
On investor-focused initiatives…
Currently the OSC is heavily focused on the issue of binary optionsOptions An investment that gives you the right to buy or sell it at a set price by a set date. The buy right is termed a “call” option, and the sell right is termed a “put” option. You buy options on a stock exchange.+ read full definition. We are increasingly concerned about the growing number of websites promoting offshore binary options trading platforms that are targeting Canadians. These websites can make it seem like investors can make quick money with binary options, but we want to make it clear that no business is currently registered or authorized to sell binary options in Canada. We’re also looking at ways outside of enforcement to educate investors on the risks of binary options. To that end our team has been working with regulators in Canada, North America, and across the world to try and find the best strategy.
We also regularly participate in the OSC in the Community program run by the Investor Office. I think that Enforcement has a role to be out there explaining to people what we do and how we do it. The program also helps ensure that investors understand their rights and responsibilities with respect to their advisor. The OSC encourages investors to ask questions, do their own research and reach out to the Ontario Securities Commission if they feel that they’ve been mistreated or have concerns. We’re here for them.
Another big project that the Enforcement Branch is working on is the whistleblower program. Among other things, the program operates with the premise that it is very difficult for individuals to come forward with serious issues that affect the company or entity where they work. We want to encourage potential whistleblowers to take that courageous step forward and assist us with investigating hard-to-detect regulatory offenses.
Any final thoughts?
I want to let people know that we welcome new ideas on how we can work better, including with both the Investor Office and investors directly. Enforcement has often been utilized as a blunt instrument when everything else hasn’t worked. Our goal is to work with investors and the participants of the capital markets to explore ideas about intervening in matters as early as possible in order to prevent harm.