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Report of the Auditor General on the Alberta Securities Commission's Enforcement System

Fred J. Dunn, FCA, Auditor General of Alberta, released his report today on the Alberta Securities Commission’s enforcement system. On April 13, 2005, the Deputy Premier and Minister of Finance asked the Auditor General to complete his audit of the enforcement system as quickly as possible, and make his report public.

The report identifies significant matters in three areas where the Alberta Securities Commission must strengthen its management control systems and processes for enforcing Alberta’s securities laws.

Improving the enforcement system

The enforcement system needs more discipline. Recommendations were made to the Commission to:

  • review and clarify enforcement policies, guidelines and standards
  • ensure more consistency in enforcement processes, particularly in the recording of information gathered through enquiries, discussions and analysis to support conclusions and recommendations
  • improve controls in the enforcement system to ensure enforcement decisions are independently reviewed and files are brought to a conclusion in a timely manner
  • measure and report on the effectiveness of the enforcement system

Improving systems and processes to manage conflicts of interest

Conflict of interest policies are not adequate and employee and Commission Member investment disclosures are not being adequately monitored. Recommendations were made to the Commission to strengthen its conflict of interest policies and to improve its monitoring of employee and Member compliance with the policies. 

Improving the Commission’s governance

The report identifies several areas where oversight of the Commission’s activities by Commission members should be improved. Recommendations were made to the Commission to improve the oversight provided by Members for human resources and the enforcement system. Also, a recommendation has been made to the Minister of Finance on the need to establish a lead independent member for the Commission. 

Allegations of an inadequate enforcement system

Prior to starting his work, the Auditor General became aware of public allegations that the Commission was not consistently enforcing Alberta’s securities laws. Following an examination of numerous case files and interviews with many current and former employees of the Commission, the Auditor General concluded there is not sufficient evidence to recommend to management that any case file examined be re-opened.

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