Effectively No Capital Markets Criminal Policing Within Canada
There is effectively no capital markets criminal policing within Canada. The RCMP Integrated Market Enforcement Team created in 2003 to provide national capital markets criminal policing was essentially disbanded in 2013. IMET's purported function folded into the RCMP Commercial Crime Unit, with the Ottawa IMET office discontinued and the Toronto, Montreal, Vancouver and Calgary IMET regional office police moved into the offices of the provincial securities commissions.
The RCMP Commercial Crime Unit website, http://www.rcmp-grc.gc.ca/ccb-sddc/fraud-fraude-eng.htm, indicates that the RCMP is unlikely to receive complaints and take primary responsibility for investigating capital markets crime under the Federal Criminal Code. For example, it says "Fraud investigations in the first instance remain the responsibility of the police service or investigative agency of primary jurisdiction. However, Commercial Crime Sections may assume, or may be directed to assume investigative responsibility in cases of major fraud." Provincial, regional and municipal police forces rarely accept jurisdiction for investigating complaints on capital markets crime, since they lack the manpower and expertise to do the cases successfully. These police forces stopped doing cases in 2003 when the RCMP IMET was created and no retooling has occurred after IMET was effectively disbanded in 2013.
It is not clear who would direct the RCMP Commercial Crime Unit to assume investigative responsibility in cases of major capital markets fraud. Its website says: "In cooperation with its partners, the various provincial and territorial securities commissions, and both public and private regulatory agencies, the RCMP conducts investigations related to securities fraud." This suggests that RCMP police officers only get involved in capital markets criminal cases, when the various regulatory agencies ask them to do so. There has historically rarely been criminal investigation referrals from the regulatory agencies to IMET or the provincial, regional and municipal police forces. No major capital markets criminal cases have been done by the RCMP Commercial Crime Unit since 2013, despite the RCMP police officers sharing office space with the four major provincial securities commissions.
There have been no criminal investigations of the Nortel Health and Welfare Trust theft by Nortel to improve its own cash flow, of Deutsche Bank and other primarily international banks for their simultaneous CDS and liquidity contracts within Non Bank ABCP, widespread income trust cash yield deceptions, and CIBC CDS exposure and loss misrepresentations. There were not even securities regulator investigations on these matters. Coventree Non Bank ABCP and FMF Capital income trust securities regulatory actions on misrepresentation in the secondary markets resulted in trivial settlements that were a wrist-slap rather than major deterrence of future fraud.
The insolvency courts have proven to be blind to alleged criminal conduct, with private sector court monitors, like Ernst and Young, actively suppressing evidence and due court process to ensure justice for the victims of capital markets fraud.
In 2009, Gary Logan, former Detective Sergeant of the Toronto Fraud Squad, and Diane Urquhart proposed a new Securities Crime Policing Model based on a new National Securities Crime Unit, that would provide a central capital markets criminal complaints intake process and co-ordinate police services' investigations of these criminal complaints. The National Securities Crime Unit would solve the problems of complainants not knowing where to complain and of securities regulators and police forces "passing the buck" on who has jurisdiction to investigate the complaints. Mismanagement in processing criminal complaints loses time and access to evidence for investigations. There is no accountability or transparency to the complainants on the status of their complaints, whose investigating them and the status of the investigation.
The transfer of the RCMP IMET officers to the offices of the four major securities commissions in 2013 was a capitulation towards the investment industry's securities crime policing model of the RCMP IMET and securities regulation enforcement being merged in to single National Enforcement Agency. The National Enforcement Agency is to become a division of the proposed National Securities Commission. Under this investment industry's securities crime policing model, the National Securities Commission management decides what criminal investigations occur and which proceed to prosecution within the courts.
There will be no independent securities crime policing without securities industry and political influence.
The Gary Logan and Diane Urquhart Securities Crime Unit Proposal should be adopted rather than the National Enforcement Agency approach of the investment industry, if Canada is to change its white collar crime haven status in the world.