Canada says watchdog to battle securities crime

Wed May 26, 2010 4:36pm EDT
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By Louise Egan and Jennifer Kwan

OTTAWA/TORONTO (Reuters) - Canada promised a crackdown on market abuses on Wednesday when it introduced a draft law to set up a national securities regulator, but a showdown looms with two provinces that want to preserve their own powers.

The proposed national watchdog would replace the current system of 13 provincial and territorial agencies that oversee stock and bond markets. Canada currently is the only industrialized country that does not have a single regulator.

Finance Minister Jim Flaherty said it would cut costs and make it easier to crack down on white-collar crime.

"Those who commit securities fraud will face a tougher, more comprehensive regime. No more falling through the cracks," Flaherty told reporters.

Under Flaherty's proposal, the legislation would become the vehicle to prosecute securities fraud, market manipulation, prohibitive insider trading and misrepresentation across Canada.

Provinces and territories would have the right to opt out of the new system but the national regulator could still pursue wrongdoers for offenses committed in such jurisdictions.

While bankers and investment dealers welcomed the plan. Alberta and Quebec, two rich and influential provinces, fretted about dilution of their sovereignty.

Daniel Paille, a legislator from the separatist Bloc Quebecois, said in the House of Commons that the proposed regulator would be "a predator, a plunderer, a vandal (and) a thief of Quebec's sovereignty."   Continued...