The head of Quebec’s securities regulator says the watchdog has overhauled the way it handles investigations in the wake of its last major insider-trading case, vowing his teams won’t repeat the same mistakes as it tries to bolster its credibility in fighting white-collar crime.
Louis Morisset, chief executive of the Autorité des Marchés Financiers, said in an interview Tuesday that the watchdog has “completely reformed” the way it conducts search and seizures, and processes the material obtained, since a judge lambasted the AMF for its shortcomings five years ago in what was known as the Amaya affair.
“We took that decision very, very seriously and completely reformed the way we do things,” Mr. Morisset told The Globe and Mail of the judge’s ruling. “I’m very proud of where we are today. And I would say that what happened in that case won’t happen any more.”
The AMF is among the provincial securities regulators with the strongest enforcement records, but it failed to win a conviction or sanction of any sort in the Amaya case. A judge in 2018 stayed insider-trading charges against David Baazov, the gambling company’s former chief executive, and two other men, saying the AMF showed a “lack of rigour” in prosecuting the file.
The AMF lost because of what the judge characterized as a failure to meet its duties and obligations to offer timely disclosure of evidence, and properly protect solicitor-client privilege. That in turn jeopardized the integrity of the legal process, the judge said at the time.
At one point in the court proceedings, lawyers for the three men said the AMF dumped 16 million items of data onto their lap, making it exceedingly difficult to prepare a proper defence in a timely manner. They said the AMF later advised them that the vast majority of these items were communicated in error.
Today, when it conducts search and seizure operations in people’s homes and places of business, the regulator is “much more surgical” and “much more careful” with the material targeted than in the past, Mr. Morisset said. The AMF has also beefed up the computer forensic team processing the material, he said, so that evidence is cut back “to its maximum” before being handed over to its investigators, he said.
“It’s a completely different world today, the way we operate,” said Mr. Morisset, who will leave the AMF in July after a 10-year tenure as CEO. ”We’ve made tremendous steps over time.”
The AMF says its enforcement record over the past five years includes the sanctioning of 414 people and businesses, the levying of $83-million worth of fines, and imprisonment totalling 65 years as a result of cases in which it was involved. In 2004, the regulator had 40 people working on inspections, investigations and prosecutions. Today, it has about 200.
Still, the challenges in enforcement are numerous. Among them: Regulators have to respect the Supreme Court’s 2016 ruling in the R. v Jordan case, which established mandatory time limits of 18 months for criminal trials in provincial court or 30 months in superior courts. The idea is that an accused has a constitutional right to a timely trial.
“I’m concerned that we’re facing Jordan motions almost every time” we prosecute, Mr. Morisset said. “The Supreme Court hopefully at some point will have a case to reassess their decision because I think it’s creating real issues.”
A database compiled by Global News in 2019 found that nearly 800 criminal cases – ranging from manslaughter to drug trafficking and murder – have been stayed as a result of judges applying the Jordan standard.
The AMF currently has another major insider-trading case on its plate. Last June, it filed charges against a former executive at pension fund giant Caisse de dépôt et placement du Québec and two other individuals, alleging that they either leaked or acted on confidential information about developments at food distributor Colabor Group Inc. The allegations have not been tested in court.