Alberta Securities Commission to allow no-contest settlements in some cases

On Friday, May 4, 2018, the Alberta Securities Commission (“ASC”) announced an addition to the Credit for Exemplary Cooperation in Enforcement Matters Policy (ASC Policy 15-601) (the “Policy”); namely, the ASC will allow respondents to enter into no-contest settlement agreements (i.e., settlements that do not require an admission of wrongdoing) in certain circumstances. This is a change from the ASC’s prior policy decision not to allow for no-contest settlement agreements, which we wrote about here.

Under the new Policy, no-contest settlement agreements can be used when: (i) the conduct is self-reported; (ii) respondents are co-operating with regulators; and, (iii) respondents are taking financial responsibility for their actions. A no-contest settlement agreement will not be considered in cases where the respondent has engaged in abusive or fraudulent conduct, or if it is in the public interest to proceed with a quasi-criminal or criminal investigation.

The ASC says that this new enforcement tool is intended to: (i) offer a new way to provide restitution and disgorgement to victims or those who have been harmed by securities misconduct; and, (ii) provide market participants with an opportunity to address their misconduct with efficiency and certainty. In addition, the availability of no-contest settlement agreements strengthens existing incentives in the Policy for individuals and companies to self-report violations of securities law.

The ASC’s announcement also brings Alberta in line with other jurisdictions, such as Ontario, which has allowed the use of no-contest settlement agreements since 2014. We have previously commented on a number of no-contest settlements reached with the Ontario Securities Commission (see here and here and here).

We anticipate that no-contest settlement agreements will be available only in very limited circumstances. Indeed, the ASC ultimately has the sole discretion to determine whether a no-contest settlement agreement is available in a particular case. It is likely that the ASC will exercise this discretion sparingly, in part due to the ongoing debate as to whether no-contest settlements are appropriate from a public interest standpoint (which we have previously written about here).