SCB grows new teeth under SIA
Automatic sanctions of up to $1,000 per day for failure to file requisite financial statements are among the many new teeth the securities industry’s regulator will have once the Securities Industry Act, 2011 (SIA, 2011) comes into effect.
Expected to come into force by the end of the year, SIA, 2011 will streamline the Security Commission of The Bahamas’ (SCB) disciplinary process and give the regulator considerably more enforcement authority than it has now.
Briefing media at a “Getting to Know the Securities Commission” press conference last week, SCB’s Deputy Legal Counsel, Gawaine Ward, said the changes include SCB’s ability to pursue more persons in its effort to properly regulate the industry.
“[Under the new act] our enforcement authority has been considerably expanded and we have the authority to make a number of orders in the public interest, concerning any person. Right now our authority extends only to our registrants and to financial institutions,” Ward said.
That changes with SIA, 2011, according to Ward, who says the SCB will be able to pursue any person – corporate or individual – related to or affiliated with registrants.
The act also introduces certain automatic penalties for the failure to file annual audited statements. Currently, the SCB must hold administrative hearings for persons who fail to file financials, statistical data, or any other requirements. Under the new act, sanctions of up to $1,000 per day kick in automatically when filings have not been promptly made.
Ward listed some of the SCB’s limitations under the Securities Industry Act, 1999 – the legislation currently governing the industry. Under it, the SCB can only suspend a registrant’s license after it has held a hearing on a matter before it. It cannot appoint someone to oversee a registrant even when it deems that is the appropriate course of action. It cannot apply to the Courts to liquidate a registrant either.
“All this will change under the new act,” Ward said. The SCB will be able to issue orders to suspend a registrant for up to 15 days under SIA, 2011, although a hearing would have to be held thereafter. Ward also said the SCB will be able to appoint someone to oversee a registrant, and will be able to apply to the Courts to have a registrant liquidated as well.
“It will place us on much better footing when it comes to ensuring that our markets are stabilized,” Ward explained.
Simplification of the administrative enforcement process will involve moving from a two-tier panel system to a single panel that reviews matters and issues decisions. The existing law requires two panels – a disciplinary committee and a hearing panel. The former is a standing body of five persons with three SCB board members and two external representatives. The latter is a body of three board members.
“Under the new act, we will be able to simply set up one body … Everything will go directly to that body and that one panel would have the full authority of the Commission to finally dispose of all disciplinary measures.”
Ward explained that if the panel determined that a matter was criminal in nature it would still need be referred to the Office of the Attorney General under SIA, 2011.
The disciplinary process will be transparent as the rules would have gone through a public consultation process prior to implementation, and will be available on the SCB’s website.
The SIA, 2011 passed in the House of Assembly on April 18th, 2011 and then in the Senate on May 19th, 2011. The act is set to come into force on December 30th, 2011, shortly after which drafted regulations are expected to be signed into law, according to a press release from the SCB.
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