Whose Side are Regulators On?

(from Lorrie Goldstein, Toronto Sun, February 12, 2012)

You have to protect yourself. It takes some time, but it has to be done. Certainly the regulators aren’t going to do it for you.

The Ontario Securities Commission, Canada’s securities regulator by default since we don’t even have a national one, is urging the adoption of so-called “no contest” settlements here for major financial fraudsters.

These “no contest” settlements in the U.S. by the Securities and Exchange Commission, where the perpetrators don’t even have to admit wrongdoing in return for paying what to them are insignificant fines, allowed Wall Street to walk away unscathed from the financial carnage it inflicted in 2008. 

Not just on ordinary Americans, but on people in Canada and all over the world investing for their retirements and kids’ educations. 

“No contest” settlements simply save the SEC — which cites the problem of limited resources — time and money, allowing it to mark more cases as “cleared” on its books at the end of every year. 

Not only have these settlements historically done nothing to clean up corruption in the stock market or the U.S. financial services sector, they’ve encouraged it, because the Wall Street banks and other big financial players simply regard them as the cost of doing business. 

No major Wall Street executives have gone to jail for the massive fraud their banks committed in 2008, since criminal prosecutions by the U.S. justice department have been virtually non-existent. 

Why would we copy this in Ontario, where the idea is opposed by organizations representing ordinary investors, since it makes holding corporate fraudsters to account even harder than it is now? 

To quote one senior regulator explaining, “The attitude in Canada is that there is a lot more room for compassion and understanding and rehabilitation.” 

Compassion for corporate fraudsters? People who steal from widows and orphans?