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Originally published: February 10, 2017
James (Jim) Sinclair serves as General Counsel of 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 Jim to discuss his background, the role of General Counsel and the General Counsel’s Office, the evolution of the OSC and the importance of investor protection.
Before joining the OSC in February 2015, I was Director of Legal Services at the Ontario Ministry of Finance where, in addition to working on the provincial BudgetBudget A monthly or yearly estimated plan for spending and saving. You work it out based on your income and expenses.+ read full definition and leading the Budget Bill initiative, I was also heavily involved in the province’s bondBond A kind of loan you make to the government or a company. They use the money to run their operations. In turn, you get back a set amount of interest once or twice a year. If you hold bonds until the maturity date, you will get all your money back as well. If you sell…+ read full definition offerings and derivatives transactions. That is not to say that securities, pensionPension A steady income you get after you retire. Some pensions pay you a fixed amount for life. Others save up money for you while you are working. You use that money to create income after you retire.+ read full definition issues and insurance matters did not cross my desk quite regularly. I also worked on some significant files related to the fallout from the 2008-09 economic and market crisis. This included the G.M. and Chrysler bail-outs, the senior funding facility for assetAsset Something of value that a company or an individual owns or controls. Examples: buildings, equipment, property, a car, investments, or cash. Can also include patents, trademarks and other forms of intellectual property.+ read full definition-backed commercial paperCommercial paper A kind of unsecured loan you make to a corporation. You buy the investment at a discount and you get the full value back on the maturity date. The time period is usually nine months or less.+ read full definition (ABCP) and pension reform. I was also the Ministry’s lead on both the Ornge Air Ambulance and gas plants inquiries by committees of the legislature. It was very interesting work, but my first love has always been securities.
Before working at the Ministry I spent 14 years at an investmentInvestment An item of value you buy to get income or to grow in value.+ read full definition management firm. We mostly managed money on behalf of institutional pension funds, investing in hedge funds, and in private equityEquity Two meanings: 1. The part of investment you have paid for in cash. Example: you may have equity in a home or a business. 2. Investments in the stock market. Example: equity mutual funds.+ read full definition and venture opportunities. But before any of that I worked here at OSC. I was an early member of what is now known as the Derivatives Branch. I decided to come back to the OSC in 2015 because, frankly, I missed the securities world.
On the role of General Counsel and the General Counsel’s Office (GCO)…
You can think of us as a little law firm within the Commission. We’re the lawyers for the various branches of the Commission and for the Executive Team and the Commission itself. If any of the branches need advice or assistance with a legal issue, we are here to help. I like to think of all of the branches within the OSC as our clients. We can provide legal and strategic advice on policy development, on enforcement matters, on mergers and acquisition transactions, and from time to time even provide labour and employment advice.
One of the GCO’s roles is to help the OSC stay focused on its mandate, by ensuring that the Commission does the right thing for investors through its policy development, investigations and enforcement, by way of registrationRegistration A requirement for any person or company trading investments or providing advice in Canada. Securities industry professionals are required to register with the securities regulator in each province or territory where they do business.+ read full definition and through the issuances of prospectuses. The mandate of the OSC is not only to foster fair and efficient capital marketsCapital markets Where people buy and sell investments.+ read full definition in which investors can have confidence, but also to provide protection to investors from unfair, improper or fraudulent practices.
Our goal at the GCO is to make sure that the Commission lives up to a standard that is above and beyond what might normally be expected, because the protection of investors is fundamental to healthy capital markets.
As for my role as General Counsel, I also serve as a bit of a “trusted advisor” to the OSC’s leadership. I get to spend a lot of time with the Chair, the Executive Director and the Vice Chairs answering any legal questions that they may have, and try to assist them in any way that I can. I also work with the Securities Advisory Committee, which provides advice to the OSC on legislative and policy initiatives, and insights into trends in the capital markets.
On investor-focused initiatives…
The GCO is behind the scenes on a lot of initiatives and programs that the OSC and its various branches lead. We may not take the lead on many of them but we’re very often involved in some kind of advisory capacity. We’ve helped with the mutual fundMutual fund An investment that pools money from many people and invests it in a mix of investments such as stocks and bonds. A professional manager chooses investments that match the fund’s goals for risk and return. You can redeem your fund units at any time.+ read full definition embedded fees initiative, Fund FactsFund Facts A user-friendly guide that provides key information about a mutual fund including fees and performance. Mutual fund companies are required to give investors a copy of Fund Facts before they decide to purchase a fund.+ read full definition documents, and more recently provided guidance with the Best Interest Standard initiative.
We are regularly consulted by the Inquiries and Contact Center, particularly when there are escalated complaints, and we help in drafting responses. Our Freedom of Information and Privacy work, our contractContract A binding written or verbal agreement that can be enforced by law.+ read full definition work, and the National Systems Renewal Project keep us very busy. We also work very closely with Enforcement on a range of matters that are being investigated or litigated.
One big project the GCO is currently working on is the Cooperative Capital Markets Regulatory (CCMR) initiative, which has important implications for investors. We are very deeply involved in this initiative and have been since before I started.
We were also involved in the establishment of the OSC’s relationship with FAIR Canada, and remain actively involved in talking to FAIR about their ongoing activities and funding.
On the evolution of the OSC…
One difference between the OSC of 25 years ago and the OSC today is that it’s a much more professionally-managed organization with a more sophisticated understanding of its role. The OSC now takes a much broader view of its role as a steward of the public interest.
With every new product and new market the main challenge for any regulator is being able to keep up with the ever-evolving securities landscape. The types of issues that have developed have become more complex and sophisticated over time and I think the Commission is doing a better job at understanding where risks lay and foreseeing issues that could arise in the ever-changing industry. We see that in the creation of LaunchPad.
Retail investors depend more and more on their investments for their financial security. For investors, it’s not just about how to save money and make sure that it’s appropriately invested. It’s also about how to keep that money secure and make sure that it isn’t squandered through mismanagement or fraud – and the OSC has an important role to play in that regard.
There is a retirement crisis facing the province, and the country. That was really what was behind a lot of the pension reform legislation that I was involved in when I was at the Ministry of Finance. To me, it brings home the importance of entities like the Ombudsman for Banking Services and InvestmentsOmbudsman for Banking Services and Investments A national, independent and not-for-profit organization that helps resolve disputes between consumers and financial services firms when they can’t come to a resolution on their own.+ read full definition (OBSIOBSI See Ombudsman for Banking Services and Investments.+ read full definition) and FAIR Canada – in addition to the Investor Office – which are helping to give investors a fair shake.
Any final thoughts?
I think one of the things that the OSC can be proud of is the role that our Investor Office plays in the protection of investors. The Office plays an integral role in getting the message out to investors and bringing their input and perspectives back into the OSC.
Our role at the OSC is not just about enforcing the rules; it’s about making sure that people are aware of the risks, that they’re knowledgeable about their investment choices, and know where to go if they have questions. This wasn’t something that we were doing 25 years ago and I think that it’s a critical development in our evolution as a regulator.