"If you can''t measure it, you can''t manage it" - what Ontario Securities Com-mission Chairman David Wilson calls a "pithy but wise management dictum" - is the mantra behind the OSC''s 2006 Annual Report, released in late July.
A 35-year veteran of the securities industry, Wilson stepped down from his positions as vice-chairman of the Bank of Nova Scotia and chief executive officer of Scotia Capital in Toronto to assume the helm of the OSC on Nov. 1, 2005.
There's little doubt that the 2006 report, Wilson's first, bears the stamp of his long career in the private sector. The first page is dedicated to the OSC's "key organizational goals" and most of the first 15 pages of the 40-page document examine those goals and measure the OSC's performance in relation to them.
"When I got here, I wanted to create metrics, a management tool that hadn't been in place before but was not overly resource intensive, to measure how we were doing," Wilson says. "The report reflects that objective."
However, not everyone is happy with that approach.
Philip Anisman, a Toronto securities law expert, says the report misses the mark.
"The report reflects a misconception on the part of the Commission that it should report as if it were a corporate issuer," he told Law Times. "As an annual report of a regulatory authority whose activities are subject to legislative review, the report should be an element of the accountability mechanism."
But Wendy Dey, the OSC's director of communication and public affairs, notes that the commission is a Crown corporation, albeit a not-for-profit company.
"We have no choice but to behave like corporations in certain respects," she says.
For his part, Anisman says he has no quarrel with the commission's general goals - "They're fine as far as they go" - but laments what he calls the "lack of detailed data" supporting the OSC's accomplishments "in regulatory terms."
He contrasts the OSC report with the annual report of the Securities & Exchange Commission (SEC) in the U.S.
"The SEC report is hundreds of pages long and reflects the need for accountability in a much more serious manner," Anisman says. "The truth is that the OSC demands much more from the self-regulating bodies that it supervises, like the clearing agencies, than they provide in their annual report."
Anisman, who spoke to Law Times while on vacation, did not, however, have the benefit of the OSC's Report on Statement of Priorities for Fiscal 2005/2006. The 16-page document, not part of the annual report but available on the OSC's web site (www.osc.gov.on.ca) together with other supporting materials, provides considerably greater detail by presenting tables that mark the OSC's progress against the "success measures" the commission has identified.
And Wilson says he expects the OSC to refine its metrics further each year.
"This is only the first year and we expect that as time goes on we'll be drilling down into the details," he says.
Dey also argues that Anisman is trying to have his cake and eat it too. She points out that just last month he criticized the commission publicly for not measuring performance.
"Now he's criticizing the commission for doing just that," she says. "We believe what we're doing is totally appropriate. We're walking the walk by doing what we ask our reporting issuers to do and doing it three months after fiscal year-end."
However that may be, the report lists the commission's five goals as follows:
1. Provide fair, vigorous and timely enforcement;
2. Take actions to better understand and address the needs of the retail investor;
3. Promote a harmonized, simplified and strengthened securities regulatory framework for Canada;
4. Work to achieve appropriate regulatory integration of North American and global capital markets; and
5. Support and promote a more flexible, efficient and accountable organization.
"The last-stated goal is the foundation and the other four are equal in priority," Wilson says.
Among the OSC's accomplishments, as cited in the report, are the following:
- 81 per cent of case assessment and surveillance files were transferred to investigation or litigation within four months, down from the previous timeline of six months;
- 75 per cent of investigation files were completed with nine months of transfer from case assessment and surveillance, meeting the goal the Commission had set;
- OSC staff actively participated in some 40 Canadian Securities Administrator (CSA) regulatory policy projects and 14 CSA standing committees;
- In 2005-06, the OSC participated in nine investigations of mutual enforcement interest involving other regulators;
- A projected reduction of 25.5 per cent in total participation and activity fee revenues in the new OSC fee schedules;
- A projected reduction of registration fees of 20 to 50 per cent for smaller registrants; and
- 85 per cent of priority rule-making initiatives were on track as scheduled, slightly below the target of 90 per cent.
A 35-year veteran of the securities industry, Wilson stepped down from his positions as vice-chairman of the Bank of Nova Scotia and chief executive officer of Scotia Capital in Toronto to assume the helm of the OSC on Nov. 1, 2005.There's little doubt that the 2006 report, Wilson's first, bears the stamp of his long career in the private sector. The first page is dedicated to the OSC's "key organizational goals" and most of the first 15 pages of the 40-page document examine those goals and measure the OSC's performance in relation to them.
"When I got here, I wanted to create metrics, a management tool that hadn't been in place before but was not overly resource intensive, to measure how we were doing," Wilson says. "The report reflects that objective."
However, not everyone is happy with that approach.
Philip Anisman, a Toronto securities law expert, says the report misses the mark.
"The report reflects a misconception on the part of the Commission that it should report as if it were a corporate issuer," he told Law Times. "As an annual report of a regulatory authority whose activities are subject to legislative review, the report should be an element of the accountability mechanism."
But Wendy Dey, the OSC's director of communication and public affairs, notes that the commission is a Crown corporation, albeit a not-for-profit company.
"We have no choice but to behave like corporations in certain respects," she says.
For his part, Anisman says he has no quarrel with the commission's general goals - "They're fine as far as they go" - but laments what he calls the "lack of detailed data" supporting the OSC's accomplishments "in regulatory terms."
He contrasts the OSC report with the annual report of the Securities & Exchange Commission (SEC) in the U.S.
"The SEC report is hundreds of pages long and reflects the need for accountability in a much more serious manner," Anisman says. "The truth is that the OSC demands much more from the self-regulating bodies that it supervises, like the clearing agencies, than they provide in their annual report."
Anisman, who spoke to Law Times while on vacation, did not, however, have the benefit of the OSC's Report on Statement of Priorities for Fiscal 2005/2006. The 16-page document, not part of the annual report but available on the OSC's web site (www.osc.gov.on.ca) together with other supporting materials, provides considerably greater detail by presenting tables that mark the OSC's progress against the "success measures" the commission has identified.
And Wilson says he expects the OSC to refine its metrics further each year.
"This is only the first year and we expect that as time goes on we'll be drilling down into the details," he says.
Dey also argues that Anisman is trying to have his cake and eat it too. She points out that just last month he criticized the commission publicly for not measuring performance.
"Now he's criticizing the commission for doing just that," she says. "We believe what we're doing is totally appropriate. We're walking the walk by doing what we ask our reporting issuers to do and doing it three months after fiscal year-end."
However that may be, the report lists the commission's five goals as follows:
1. Provide fair, vigorous and timely enforcement;
2. Take actions to better understand and address the needs of the retail investor;
3. Promote a harmonized, simplified and strengthened securities regulatory framework for Canada;
4. Work to achieve appropriate regulatory integration of North American and global capital markets; and
5. Support and promote a more flexible, efficient and accountable organization.
"The last-stated goal is the foundation and the other four are equal in priority," Wilson says.
Among the OSC's accomplishments, as cited in the report, are the following:
- 81 per cent of case assessment and surveillance files were transferred to investigation or litigation within four months, down from the previous timeline of six months;
- 75 per cent of investigation files were completed with nine months of transfer from case assessment and surveillance, meeting the goal the Commission had set;
- OSC staff actively participated in some 40 Canadian Securities Administrator (CSA) regulatory policy projects and 14 CSA standing committees;
- In 2005-06, the OSC participated in nine investigations of mutual enforcement interest involving other regulators;
- A projected reduction of 25.5 per cent in total participation and activity fee revenues in the new OSC fee schedules;
- A projected reduction of registration fees of 20 to 50 per cent for smaller registrants; and
- 85 per cent of priority rule-making initiatives were on track as scheduled, slightly below the target of 90 per cent.
