Academic journal article University of New Brunswick Law Journal

A Discipline in Search of Itself? Contemporary Challenges for Securities Law in Canada

Academic journal article University of New Brunswick Law Journal

A Discipline in Search of Itself? Contemporary Challenges for Securities Law in Canada

Article excerpt


Thank you very much to the University of New Brunswick's Faculty of Law for the invitation to deliver this lecture, and for the warm hospitality I received. I am honoured to deliver this lecture named in memory of Ivan C Rand. I know Justice Rand had a varied and brilliant legal career, having been an Attorney General, a Supreme Court judge, and dean of law. For these reasons I hope he would have sympathized with the enterprise I embark on this evening. That enterprise is to reflect on the disconnect between the way securities law is taught in Canadian law schools and the evolving practice of securities regulation itself. I have taught securities law at Osgoode Hall Law School for 15 years and recently became a practising regulator. I find it puzzling that what I teach as part of the core securities curriculum bears relatively little relationship to the questions preoccupying regulators in real time. Throughout this talk I want to explore the nature of this disconnect and how we might begin to correct it.

I acknowledge that this existential puzzle might be of limited interest to a law school audience. I will therefore try to broaden the significance of this perceived disconnect by analyzing the approach to securities regulation taken in the recent Supreme Court of Canada (SCC) decision Securities Reference (1), released in December 2011. In this decision, the SCC commented on the content of Canadian securities law while considering the constitutionality of Parliament's draft securities act. At paragraph 41, the Court indicates that securities law encompasses the following topics: "[P]rospectus review and clearance; oversight of disclosure requirements; takeover bids and insider trading; registration and regulation of market intermediaries; enforcement of compliance with the regime; recognition and supervision of exchanges and other self-regulated organizations; and public education." This list of topics comprises the core curriculum of most securities law courses taught at Canadian law schools. In addition, when the SCC applied the General Motors (2) factors to the draft securities act it made a number of references to the "day-to-day regulation of securities" (3) and to the "basic nature of securities regulation which, as shown, remains primarily focused on local concerns of protecting investors and ensuring the fairness of markets through regulation of participants." (4)

I hasten to assure you that I am not wading into the issue of whether securities regulation should be structurally organized around provincial or national lines. Many views have been expressed on this issue, both before and after the Securities Reference. Rather I want to argue that the framework for communicating and teaching securities law in Canada--as represented by the SCC in the quotes above--has not taken sufficient account of broad structural changes in the organization of the capital markets in Canada and elsewhere. This means that it provides an inadequate description and analysis of the legal and institutional questions being confronted by regulators today.

In particular, the pedagogical framework remains largely driven by the concerns of issuers and focuses on the needs of those issuers to raise capital. This emphasis may well be largely the product of history. For example, in Ontario the first comprehensive piece of securities legislation was enacted in 1945 following the recommendations of a Royal Commission on Mining. This Commission was created to consider how the mining industry could be enhanced in the province. (5)

The Canadian academic literature and the pedagogical approach do not, by and large, take an investor-centric approach to the analysis of securities regulation. I say this despite the fact that the SCC refers to the importance of investor protection in its decision and that investor protection is enumerated as a goal of all provincial securities statutes. Throughout this talk I consider whether--and to what extent--the emerging realities of 21st century capital markets and securities law could be better addressed if we really took an investor perspective seriously in our scholarship and teaching. …

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