British Columbia has problems collecting fines from fraudsters, Finance Minister urges changes

Maria Nikolova

From fiscal 2007/08 to 2016/17, the British Columbia Securities Commission collected less than 2% of the $510 million in fines it had issued, according to an investigation by Postmedia.

Canada is known for the measures it has recently taken against various forms of online trading scams, including the introduction of a ban on binary options.

It appears, however, that the implementation of penalties against fraudsters presents a serious issue for regulators in certain Canadian provinces, such as British Columbia, as a recent investigation by Postmedia shows a very low rate of collection of fines. From fiscal 2007/08 to 2016/17, the British Columbia Securities Commission (BCSC) collected less than 2% of the $510 million in fines it had issued, according to the investigation. More than 80 fraudsters who have caused damage to thousands of investors (not only in British Columbia) have managed to escape paying the penalties issued by the Commission.

The Vancouver Sun reports that the Finance Minister Carole James has reacted to the data by urging changes to the process of fines collection. She said she had instructed the Commission to look at tools and options to improve collection and get back to her soon.

In an email, quoted by the newspaper, the Commission media relations advisor Alison Walker said: “We are looking forward to working collaboratively with the Ministry of Finance on possible new mechanisms to bolster our current efforts.”

Penalties are issued for fraudulent activities such as Ponzi schemes, and pump-and-dump scams where share prices are raised artificially and then sold off. Experts are concerned that if these fines are not collected, this can result in a situation of impunity, which encourages even more violations. FAIR Canada’s Marian Passmore, Director of Policy and COO, says that “it is sort of an unsexy part of the job to actually try and enforce an order and recover (fines). But it’s clearly something that needs greater focus.”

The Commission has acknowledged the poor collection rate, but says this forms part of fraudulent activity. The fraudsters make collection difficult because they have usually spent or hidden the money, or fled.

British Columbia’s collection rate compares unfavorably to that of the Ontario Securities Commission (18%|, Alberta Securities Commission (18%) and Quebec’s (20%) in the past four years. The United States Securities and Exchange Commission’s collection rate is approximately 60% on $18.9 billion in the last five years.

Imposing and collecting penalties from those that do not comply with the law is a tricky matter outside of Canada too. As FinanceFeeds reported early this month, Scottish Limited Partnerships (SLPs) which often front for fraudulent binary options firms, have escaped the fines for not complying with new transparency rules that require them to disclose details about their beneficiary owners. According to Conservative MP Margot James, no Scottish Limited Partnerships have been fined since the People with Significant Control (PSC) register came into force.

Read this next

Fintech

Meme stock lawsuit against Robinhood nears resolution

Robinhood’s legal team has reportedly informed a Miami federal court that the settlement with investors suing the company is nearing completion, with expectations for a resolution and dismissal within the next two weeks.

Web3

US arrests Yune Wang for role in 911 S5 botnet scam

A global malware network, linked to the theft of $5.9 billion in Covid relief funds and crypto crimes, has been dismantled, the Department of Justice (DOJ) announced today. The network was also involved in child exploitation, bomb threats, and various cyberattacks.

Digital Assets

US Treasury official clarifies stance on crypto mixing services

The Financial Crimes Enforcement Network (FinCEN) proposed a rule last year to classify convertible crypto mixing as a “class of transactions” with primary money laundering concerns.

Fintech

Robinhood sweetens US crypto offering with trading API

Robinhood has launched a cryptocurrency trading application programming interface (API) for users in the United States. The new API caters to seasoned crypto traders by enabling automated trading strategies, allowing users to react quickly to market movements and trends.

blockdag

After Retik Finance’s 67% Drop, Investors Turn to BlockDAG’s 30,000x ROI Potential to Recover Their Losses

Explore how BlockDAG’s $37M presale is drawing investors while Retik Finance collapses to $0.403.

Digital Assets

Terraform Labs and co-founder Do Kwon reach settlement with SEC

Terraform Labs and its co-founder Do Kwon have reached a “settlement in principle” with the U.S. Securities and Exchange Commission (SEC) regarding a fraud case, according to a court filing on Thursday.

Market News, Tech and Fundamental, Technical Analysis

FTSE 100 Index Technical Analysis Report 30 May, 2024

FTSE 100 Index can be expected to rise further toward the next resistance level 8325.00, which reversed the price earlier this month.

Chainwire

Sui and Atoma Bring the Power of AI to dApp Builders

The integration of Atoma adds new capabilities to Sui’s flourishing developer ecosystem with unique AI-querying capabilities.

<