On October 25, 2017, we wrote about the Alberta Securities Commission’s (ASC) new Policy 15-601 which “explains the use of discretion by ASC staff when considering the appropriate enforcement action and assessing the appropriate sanction for misconduct.”  A link to the publication is here.

As we predicted in October, the ASC recently issued a press release announcing a “new tool in the expanding ASC Enforcement toolbox” – the “opportunity to enter into no-contest settlement agreements in certain and limited circumstances”.

This new “tool” was created by amendments to Policy 15-601, including a new section 14. Section 14 states:

No-Contest Settlement Agreement

  1. In very limited circumstances, and in no instance where it appears to ASC staff you have engaged in abusive or fraudulent misconduct, ASC staff may choose to enter into a No-Contest Settlement Agreement with you. A No-Contest Settlement Agreement will include all of the following:

(a)        a statement of facts and conclusions asserted by ASC staff, which you neither admit nor deny;

(b)        terms and conditions of settlement, including appropriate sanctions based on your conduct, and your acceptance of those terms;

(c)        confirmation that you have paid, or undertaken to pay, at the time the No-Contest Settlement Agreement is executed, Restitution[1], and any other agreed upon monetary settlement or costs.

The ASC contemporaneously published a “backgrounder” which shed some further light on section 14, stating that:

  • The decision whether to consider a no-contest settlement agreement will always be in the sole discretion of the ASC.
  • No-contest settlement agreements may be considered if the respondent has self-reported, is fully cooperating, and is taking financial responsibility for its actions.
  • No-contest settlement agreements will not be considered “if the ASC has reason to believe that a respondent has engaged in abusive or fraudulent misconduct, or if it is in the public interest to proceed with a quasi-criminal or criminal investigation.”
  • In determining whether to consider a no-contest settlement agreement, the ASC will consider a variety of factors as contemplated by Policy 16-501 regarding the determination as to whether the respondent should receive credit for exemplary cooperation.
  • This amendment to Policy 15-601 represents the first time that the ASC has formally acknowledged that no-contest settlement agreements may be appropriate, albeit in very limited circumstances where the respondent has shown exemplary cooperation. We expect that they will be rare in Alberta, but time will tell.

[1] Defined as “compensation to anyone affected by your misconduct.”