A prominent securities lawyer says the 2006 Stakeholder Satisfaction Study released by the Ontario Securities Commission last month does not provide an appropriate measure of the body's performance.
"This is a public opinion survey that doesn't provide an analytical basis for how well the Commission is actually performing its mandate," says Philip Anisman of Toronto. "Public opinion surveys, which are an exercise in public relations, are not the way to make that determination, and regulators shouldn't be making their decisions on the results from these surveys. "I would go so far as to question whether the expense of the surveys is worthwhile."
As it turns out, even Darrell Bricker, president of Ipsos Reid Public Affairs, which conducted the study, agrees that the study is one of perceptions and does not measure actual performance.
"The study results clearly show that the OSC continues to be assessed by its key constituencies as performing very well in delivering against its mandate," Bricker says. "The results, quite frankly, are positive for the regulator."
Bricker's carefully formulated remarks are quoted in the OSC's June 28 news bulletin announcing the release of the study.
The study — the fourth in a series of surveys conducted by Ipsos Reid for the OSC since 2000 — comprised individual surveys of four OSC stakeholder groups including 400 registrants, 300 reporting issuers, 300 inquiries line users, and 300 investors among Ontario's general population.
Ipsos-Reid polled respondents in March and April of this year.
Anisman is distressed that the survey focused so heavily on registrants and reporting issuers.
"This suggests the regulator's misconception that registrants and reporting issuers are their customers and clients," he told Law Times. "The question for the OSC should not be whether those they are regulating are happy with them. The commission's real stakeholders are investors."
Anisman is also unhappy with the study's failure to disclose its methodology in detail.
"For example, we don't know what questions the pollsters asked," he says. "We also don't know how the 'registrant' respondents break out. Were they compliance officers, senior executives, salespersons, media people, or lawyers? We just don't know."
However that may be, more than seven of 10 registrants and reporting issuers said the OSC was effective, flexible, and accountable in fulfilling its mandate. The respondents also said the commission was strong in its core competencies of regulation and enforcement.
The commission's overall satisfaction rating stood in the "B+ to A-" range, a slight improvement over the "B to B+" rating in 2004. Quality of service ratings remained positive at 58 per cent, but nonetheless showed a steady decline from the 68 per cent recorded in 2004 and the 74 per cent recorded in 2001.
Sixty per cent of registrants, reporting issuers, and inquiries line users believed the OSC was a strong enforcer of rules and regulations in capital markets. An equal proportion of registrants and reporting issuers dealing with investment funds said the OSC was focusing on the most important investment fund issues.
Still, less than half of the general population investors felt the OSC was a "strong enforcer."
Anisman notes that recent legislative amendments provide for an accountability mechanism in the form of annual hearings before a committee of the provincial legislature. The first hearings are yet to be held.
The difficulty is that the legislation mandating the hearings is loosely drawn and provides no specific funding mechanism.
"We don't know how far the committee will go in terms of expense," says Anisman, who maintains that the hearings under the previous mechanism — a review every five years — were cursory.
"For the annual hearings to be effective, the legislative committee should have their own counsel and their own staff to do the research necessary," he says. "The hearings should be more than a brief outing."
Anisman suggests that the OSC should finance the review through its self-funding budget.
"They do quite well, you know," he says.
Anisman appears to be right. The OSC's 2006 annual report showed that revenue exceeded expenses by $17 million, more than 17 times the projected excess of $99,000 and more than four times the 2005 excess.