Jeff Kehoe, director of enforcement at the Ontario Securities Commission, was given an initial mandate to take risks. ‘We have to be strong and we have to be courageous,’ he told The Globe in 2016.Charla Jones/The Globe and Mail
Canada’s largest securities watchdog will soon need a new top enforcer.
Jeff Kehoe, director of enforcement at the Ontario Securities Commission since 2016, will leave the regulator at the end of February, the OSC confirmed on Monday. Executive director Leslie Byberg will oversee the OSC’s 175-person enforcement division until a permanent replacement for Mr. Kehoe is found.
The OSC did not provide the reason for his departure.
Mr. Kehoe, 60, will leave a track record of overseeing high-profile cases such as the continuing action against failed lender Bridging Finance Inc.
He is also known for some equally high-profile missteps, including in 2022 when the case his team had assembled against former executives of cannabis grower CannTrust Holdings Inc. collapsed.
CannTrust had originally run afoul of regulators in 2019 for using fake walls to conceal cannabis plants that were growing in violation of the rules that existed at the time. Former CannTrust chief executive officer Peter Aceto, former chairman Eric Paul and former director Mark Litwin were acquitted after the court heard from just two of 29 potential witnesses because of confusion over the use of the term “unlicensed.”
The outcome prompted legal experts to call for the OSC to change how the regulator handles enforcement issues. “This was a really high-profile prosecution that was supposed to really change that perception, and clearly with this outcome, the OSC is going to have some soul-searching to do,” Doug Sarro, a lawyer and University of Ottawa assistant professor, said at the time.
Despite the damage to the OSC’s reputation the CannTrust case created, Mr. Kehoe is also credited with advancing several of the OSC’s most significant initiatives in recent years. When he was first hired by former OSC chair Maureen Jensen, his mandate was to take risks.
“We have to be strong and we have to be courageous,” Mr. Kehoe told The Globe in 2016, his first major interview since taking the top OSC enforcement job.
“We have to take cases that are not surefire wins; we have to take cases that are designed to send strong regulatory messages that are aligned with our strategic priorities.”
His team played a key role in establishing the OSC’s paid whistle-blower program, which was a first-in-Canada initiative announced in mid-2016, just a few months before Mr. Kehoe was hired.
As of November, 2023, the program had resulted in 19 successful prosecutions, generated a combined $48-million in fines and paid whistle-blowers a total of $9.33-million. Late last year, British Columbia’s securities regulator launched its own paid whistle-blower program in part because of the Ontario program’s success.
In 2020, Mr. Kehoe’s team produced a detailed analysis of QuadrigaCX, a cryptocurrency exchange that went bankrupt shortly after the sudden death of its 30-year-old founder, Gerald Cotten, in late 2018. That report concluded Quadriga was “an old-fashioned fraud wrapped in modern technology.”
“There is nothing new about Ponzi schemes, unauthorized trading with client funds and misappropriation of assets,” the report said. “Quadriga did not consider its business to involve securities trading and it did not register with any securities regulator. This lack of registration facilitated Cotten’s ability to commit a large-scale fraud without detection.”
That report formed the basis of an OSC policy on crypto trading platforms, which ultimately prevented several unregistered platforms from gaining traction in the Ontario market. One of those platforms was the infamous and now-bankrupt FTX exchange led by Sam Bankman-Fried.
Mr. Kehoe graduated from the University of Windsor’s law school in 1987. He spent the 1990s as a prosecutor for the Ontario and federal governments before joining the Investment Industry Regulatory Organization of Canada (IIROC) in 2001, where he climbed the ranks to eventually become head of enforcement. IIROC has since merged with the Mutual Fund Dealers Association of Canada to form the Canadian Investment Regulatory Organization.
He left IIROC in 2013 to work for entrepreneur Michael Wekerle, co-founder of Difference Capital, and left that job in July, 2015.
In a statement, OSC spokesperson JP Vecsi called Mr. Kehoe “an outstanding public servant for Ontario’s capital markets” and wished him “the best for the next stage of his career.”
“A search for a permanent successor is commencing,” he said.
With a report from The Canadian Press