Hansard -- Thursday, May 6, 2004 a.m. -- Vol. 25, No. 4 (HTML)


CONTENTS

	Routine Proceedings
		Page

Second Reading of Bills		10899
	Securities Act (Bill 38)
	Hon. J. Les
	R. Sultan
	L. Mayencourt
	Hon. R. Thorpe

Clerk of the House: Pursuant to standing orders, the House is advised of the unavoidable absence of Mr. Speaker. Further, my son, Alan Earle MacMinn, the father of Isobel MacMinn and Angus George MacMinn, is having a birthday tomorrow. Would you please wish him a happy birthday.

Bill 38, the new Securities Act, better protects British Columbia investors and improves the British Columbia business climate. The new act will implement a new approach to securities regulation. The new approach reduces paperwork and bureaucratic rules in favour of a streamlined, simplified, plain-language and results-based approach to securities regulation, founded on time-tested principles of investor protection, disclosure to investors and the regulation of dealers and advisers.

Bill 38 introduces important changes to the regulation of securities in our province. These changes include stronger enforcement powers. For example, the act contains prohibitions against misrepresentation, fraud, market manipulation, unfair practices, trading on inside information and frontrunning. Anyone who contravenes these prohibitions will be exposed to administrative and criminal sanctions. The maximum administrative penalty that the Securities Commission may order is increased to $1 million per contravention of the legislation. The Securities Commission is authorized for the first time to order disgorgement of ill-gotten gains. The maximum fine that the Provincial Court may order for conviction of an offence under the legislation is increased to $3 million. The court may also make restitution and disgorgement orders against a person who commits an offence.

A number of changes enhance investor protection. For example, under the new legislation investors will have broader rights to sue than they have today. They will be able to sue market participants for misrepresentation in offering and bid documents and in news releases, other continuous disclosure documents and oral statements by company officers. Investors will also have improved remedies for damages caused by illegal insider trading or frontrunning.

The new act contains a process for investors to make claims against ill-gotten gains disgorged under commission or court orders. The act also contains provisions to enable a code-of-conduct approach to compliance amongst registered dealers and advisers and to introduce firm-only registration. The new principle-based registration system is designed to focus market participants on what's right for investors while lowering costs of regulation.

To improve British Columbia's business climate, the act contains provisions to enable a new system of capital raising that takes advantage of Canada's high disclosure standards. British Columbia investors can look forward to increased investment opportunities as public companies in British Columbia use the continuous market access system to raise capital on the strength of their continuous disclosure record.

The complete legislative framework will consist of the new act as well as rules and forms to be made under the act. The rules, which complement the act, will contain the more detailed, although still results-based, regulatory requirements. The act includes two of the major changes to the regulatory system: increased administrative and quasi-criminal sanctions, and enhanced investor remedies. The rules will contain the specific provisions for the three major changes: the continuous market access system, a code of conduct for dealers and advisers, and firm-only registration.

The streamlined and simplified plain-language approach is reflected throughout the act, and this approach will be followed in the rules. The Securities Commission will be publishing the rules, forms and accompanying guidance for public comment in June. We expect the complete framework to be in force by the end of 2004.

R. Sultan: I'm pleased to rise in this House and comment on the Securities Act of 2004. It promises to create employment in our financial community. It promises to create employment in our financial community; it promises to facilitate the raising of entrepreneurial capital; and it holds great promise to deter financial offenders, as the minister has outlined. In this term this government's new Securities Act and its new acts pertaining to limited liability partnerships and international financial centres constitute a commendable trio of excellence in financial markets regulation and innovation, which will stimulate the rebirth of British Columbia as a major global financial centre. For those reasons, as well as many others, the minister must be commended for introducing this new act today.

My personal experience with regulatory systems in financial markets has been varied and, in some cases, very intense, beginning with post-graduate studies in money and banking at Harvard and continuing through director and senior officer positions in security issuers, ranging from Canada's largest bank to a U.S.

insurance company to promotional mining firms. I have owned and operated a mutual fund company, worked with one of Canada's largest money managers, chaired the Financial Research Foundation, been a registrant of the Ontario Securities Commission and been encouraged to take on challenging assignments by the Office of the Superintendent of Financial Institutions. Thus, I have accumulated considerable experience in both the theory and practice of securities regulation — as well as a few nicks and bruises along the way.

Why is securities regulation — indeed, the securities industry — important to British Columbia? I have, in the past, and will today again draw the analogy to what happened to the financial industry of Montreal, which at one time — right up into the sixties, I would say — was the financial centre of Canada. Things took an abrupt turn for the worse with the advent of the separatist movement in Quebec.

I felt it might be prudent to invite these two new young — not so young — would-be politicians, René Lévesque and Jacques Parizeau, over to the bank for lunch one day, and they explained very clearly and very bluntly the future of our institution in that province. Namely, we were invited to leave town — after, of course, we had trained a few of their people to take over the banking function from us. With that attitude, once they in fact were elected, many major financial companies took the hint and did leave town. It became a standing joke of all of the semitrailers lining up to head down Highway 401 to Toronto.

In a relatively short space of time, the ascent of Toronto as the financial capital of this country was confirmed. Rather late in the day I think the government of the day in Quebec realized that this, perhaps, wasn't the smartest thing to do, because of all the great jobs that were disappearing along with those semitrailers. They made some stabs at restoring credibility and confidence in the financial community, but in many ways, the damage had been done.

There is a parallel to that piece of history in what happened here in British Columbia. I title it: "How Alberta Stole the Bacon." When the previous government that we displaced came into office, did they invite the Premier of the day in for a little chat, and did he tell them that perhaps if they left town, that might suit them just fine in the new government? I don't think that happened. He didn't have to. Actions spoke louder than words. Again, while the trend had been established, it accelerated it, and the dominance of Calgary over Vancouver as a financial centre ensued.

The friendly tussle between these two financial centres continues to this day. At the end of last month the Alberta Securities Commission released the results of the first phase of a study examining the province's capital markets. I quote from the Globe and Mail of April 23 of this year. As the Globe and Mail characterizes it, it comes across as a marketing document, talking up Alberta's importance in the context of Canada's capital markets while essentially discounting that of British Columbia. There has always been heated competition, as the Globe and Mail points out, between our two respective provinces. We have been very unfortunately labelled in the past by Forbes magazine as the scam capital of the world, but we like to point out that it was Calgary and not Vancouver that launched the Bre-X scandal.

When the Vancouver and Alberta exchanges were merged in 1999, the fact that Alberta was chosen for the head office of the new entity was a blow to our pride and to our employment base, and it's hard to ignore the evidence today that really, measured by the numbers, we are definitely in second place to that centre. Alberta boasts the second-largest number of companies listed on the Toronto stock exchange and also ranks second, at 18 percent, in terms of the TSX total market value or market capitalization. Of course, that is significantly because of the presence of the oil and gas sector in Alberta.

The total market cap of Alberta-based companies is more than three times that of British Columbia's, even though Alberta has a smaller number of head offices. This is one clue, I think, to our financial destiny, and I'll come back to that. We have many, many much smaller companies. While we outpace Alberta in terms of the number of companies listed by more than two to one, because of their larger average size, again, the Alberta-based companies are better at reaching that scale which graduates them onto the TSX. Quebec, as well, is singled out in that Alberta report as also having very significant market capitalization of its domestic firms, 14 percent.

To sum up this report from Alberta — a report card, you might say, on the competitive standing of the various markets across Canada — the Globe and Mail concludes: "Anyone involved in the securities business is well aware that the corporate finance opportunities in Alberta, and especially Calgary, outstrip those in British Columbia, and it has been that way for a while now. There is no point in rubbing anyone's nose in it." I would second that. Okay, you won, but watch out. Under the guidance of this minister and with the stimulus of this new legislation, I think Alberta should look to its laurels.

Against this undercurrent of regional competition between two western capital markets, we have imposed from the very top in Ottawa another view, the centrist view, and the quest for national regulation. If I may, I would like to read a few words from a recent report by the so-called Wise Persons' Committee, established by our federal government to review the structure of securities regulation in Canada. Reading from the executive summary:

A substantial majority of capital market participants are demanding a fundamental change, the creation of a single securities regulator. The Wise Persons' Committee agrees.

That is a synopsis of what the wise people have said about the state of our markets. Reflecting commentary on that report, Finance minister Goodale said back in January that Ottawa was most anxious to move forward in a collaborative way. Quoting again from the Vancouver Sun of January 20: "I think it's pretty clear to me that the status quo, just leaving things the way they are, is not good enough." He seemed to feel: "When the Wise Persons' Committee says there is only one other country in the industrialized world that has the system that we do — namely, Bosnia-Herzegovina — I think that does say we have to improve the way we do it in Canada."

In the new government in Ottawa, we have further indications that we must move forward briskly and bring it all under a national regulator located — guess where — in Ottawa. I think the timing of this proposal, quite apart from the financial markets issues involved, is unfortunate, and I feel some tinge of sympathy for the persons who wrote this report to suggest a major, major concentration of regulatory power in our nation's capital at a time when the spectacle of mismanagement and waste is so prominent in our headlines. I don't mean to get into the gun debate, but the billion dollars spent on the gun registry is certainly evidence of a certain inability to manage affairs very well. I would suggest that the managing of securities is infinitely more complex than the managing of your old, outdated Lee-Enfield rifle.

I'm afraid our federal government has a bit of a credibility problem these days. Quite apart from the issue of management competence, which shouldn't be far from one's thoughts, you have to really think very hard for a program that one would say is managed extremely well in that city. I sat as I shaved this morning — when I get many of my best ideas — and I really couldn't come up with a suggestion. Maybe members opposite and members here could suggest some candidates for a model of efficiency, responsiveness and modernity in an apparatus that is under the management of those fine people, but my imagination failed me.

There are many issues aside from competence that undermine the thrust of the Wise Persons' report. I would like to describe some of the alternatives that, in fact, British Columbia has and some of the philosophies that can underlie it. In this case, I will confess to having rather brazenly adopted some ideas and analysis by a distinguished friend who is of high standing in the financial community — a person of much authority and experience in this business, much more than mine — who really prefers to remain anonymous, but some of the persons who might listen to this might figure out to whom I'm referring.

Anyhow, this eminent person, a wise person in his own right, refers to the philosophy of regulation to start with. As befits a Harvard graduate, and he is one, he starts by referring to Prof. Carl Kaysen — who in fact was a professor hanging around that place when I was there — who was a student of industrial organization. He talked about three techniques of regulation in ascending order of unavoidable government intrusion into the free market.

The least intrusive, balancing market powers, structures the marketplace so that the various actors in the marketplace police one another through competition. If somebody is out of line, inefficient and has a cost structure, he just goes out of business. That's the way the world works. The second option is to institutionalize the responsibility of the firm and say: "You're responsible. The competitive forces are insufficient, but we look to you to maintain order." Thirdly, set up a commission or a like body with powers to constrain the structure, entry, conduct, exit and sometimes even the pricing practices of firms in the prescribed business sector. Of all countries in the world, we know an awful lot about that philosophy and that approach here in Canada.

The balancing-of-market-power approach, the first of those three alternatives that Professor Kaysen talked about, is determined, first of all, by the size of the marketplace. We have trouble pursuing this ideal to its ultimate in this country because many of our markets are somewhat small; the players, by virtue of their global scale, are very large; and the market shares are huge. We have what economists like to call oligopolistic structures. If you can make it work, you can — and governments do — look to the enterprises to police themselves.

A second order, though, is to institutionalize the responsibility within those firms through laws governing their conduct. The one that immediately springs to my mind may not be too familiar to Canadians, but it is the Sherman Act. It's against the law, a criminal offence, in fact, in the United States to conspire to monopolize. Monopoly is a bad word. The whole idea of creating competitive market structures through government law has kind of fallen out of vogue. It really arose in full splendour out of the abuses of the Great Depression in the United States, when the abuses of corporate power were rampant. I must say, given globalization and all the other forces at play in markets today, the idea in the Sherman Act — that companies can monopolize and that its companion legislation must be brought to bear — has somewhat fallen out of fashion.

The third technique of regulation that Professor Kaysen referred to as certainly not is the quasi-

autonomous commission. You give it authority. It exercises a combination of legislative, administrative and judicial powers. It is, by its very nature, in the business of politics — not in the sense of partisan leanings but in the sense it must make difficult policy decisions. We love to do that in Canada. We have commissions figuring out how the road systems should work. We have, in effect, health authorities, which are commissions in their own right. We have in the United States and securities market the Securities and Exchange Commission, which is frequently cited as a model for possible emulation in Canada. Of course, here in British Columbia we have the B.C. Securities Commission.

The commission concept and rule-making powers are two of the great inventions of government for two reasons: the external pressures of regulatees for certainty — surprise, they want to be regulated for certainty — and the internal pressure on government officials to delegate functions on down because of the sheer complexity of regulating a marketplace. You end up with these large bureaucracies. That's a third approach that has certainly ingrained itself in the Canadian experience.

For decades, critics of government have criticized regulators' rules as excessive red tape, apparently unaware that much of it derives from the equally vocal outcries for ever-increasing certainty as to how the law is to be applied on the part of those upon whom the law is being applied. You might say they're just being responsive. You want rules; we'll give you rules. We have major, major industries in this province — and I won't go into finger-pointing here — where that approach is rampant.

The government — and it goes back to the 1980s apparently, even before this present government was elected, but it certainly gained accelerated momentum — has attempted to cut red tape to fulfil the promise of this government to discard a full one-third of all regulations — a goal, by the way, that this proposed legislation the minister has introduced this morning will go a long way to help fulfil. The question has always been asked: how do bureaucrats cut red tape? The rather flippant answer for some is that they cut red tape lengthwise. That's an attempt at humour. Anyway, to focus on red tape or rule reduction as an end in itself is often futile. Invariably, the cause of the problem is not the rules but the underlying legal institution that requires such rules in the first place.

Finally, quoting my learned friend's writings on the subject, he cites Prof. Fred Carrothers, of some local eminence, writing about labour law institutions, persuasively arguing that legal institutions generally tend to degenerate over time from doctrine to dogma to fiction and finally to myth. I think we can point to examples of that. At the end, the process itself is, in many cases, worse than the system of rules itself. That is a rather discouraging treatise on what happens in worlds of regulation, but I think it is a view of regulatory cultures that many in this House would be sympathetic with.

Back to the world of securities regulation. Where we have regulators in abundance everywhere, what alternatives to the newly introduced Securities Act might British Columbia embrace? Let's start with the U.S. model. It's a huge capital market. The Securities and Exchange Commission rules supreme. Perhaps it's little recognized, though, that most states — in fact, I think all states — have their own very active securities regulators as well, not unlike the Canadian system. Those Canadians who believe, in their naïvety, that it is basically all done out of Washington don't really understand the American system very well.

It's a big capital market. I think it is easy to conclude that the reason it's big is because it's so tightly regulated and honesty, good conduct, clarity and transparency prevail. Again, in my own experience, I wouldn't say that's quite the way it is in reality. To step back a moment…. To say that the reason the American capital market is so large and deep and liquid is because of regulation laws — again, one of my insights as I shaved this morning, and some of them are better than others — would be like saying the reason they don't have more automobiles in the Congo — or Zaire, as it is called these days — is because they don't have enough traffic policemen. I don't think that would be a very thoughtful conclusion. Similarly, to say that the American capital market is so big, deep and liquid because of regulation would be equally fallacious in my opinion.

The reason the American capital market is so big, deep and liquid is because they have a lot of capital. If we are concerned about the operation and functioning and availability of capital in Canada, we should put our minds, as legislators and leaders, to how we increase the volume of capital created and invested in Canada. This is the key to having active and vibrant capital markets, not hiring more cops. I think that is self-evident.

Also, those who are entranced by the U.S. model as the paragon of high ethical standards should be reminded of the recent scandals, the two most widely quoted names being Enron and WorldCom, whose collapse and the triggering of like shrinkages of market capitalizations resulted in a shrinkage in market cap in that country about equal to ten times the size of the Canadian economy. That's a big shrinkage in market cap. All the regulators in the world down in Washington and all the regulators in the world in each of the state capitals and all the king's horses and all the king's men couldn't put it back together again.

Those who think that having a very large, sophisticated and elaborate regulatory apparatus at the centre — i.e., a single regulator — prevents these sorts of shenanigans don't really have much of an understanding of how the world works. The problem isn't rules. The problem is ethics, malfeasance and private greed. Those human traits, I suppose, will always be with us, but to think that you can banish them by having more rules and more lawyers going over the rules is somewhat naïve.

What is the new British Columbia model? With this legislation, I think British Columbia — and the minister — is announcing to the world that we are going to try and do things a little bit differently in this province. I

will quote from an excellent talk given on April 28 of last year — just a little over a year ago — by the chair of the British Columbia Securities Commission to the Canadian Corporate Counsel Association national spring conference meeting in Calgary. Let me just read excerpts from what Mr. Doug Hyndman, the eminent chair of the B.C. Securities Commission, has to say.

Mr. Hyndman goes on to talk about what he calls the B.C. model — a new way to regulate, an approach that attacks the threats to investors and market integrity with tools that fit the job. I will list the key elements of the legislation as Mr. Hyndman described it a year ago:

Of course, as an aside — and this is not Mr. Hyndman's comment but my own — the 80 percent cheaper impactees, if I can invent a word — those who find they are part of the 80 percent of cost structure which is being cut out — don't necessarily applaud this philosophy. But I think investors and issuers of securities should.

Mr. Hyndman went on in further detail, but I think you get the general gist of the B.C. model that the

commission, their advisers, the people consulted, the legislators and the officials working under, previously, the Minister of State for Deregulation and, currently, the Minister of Small Business and Economic Development have come up with. I think it is very consistent with the philosophy of this government to liberate business from regulation that is, in this case, costly and, on the evidence, doesn't accomplish the job of protecting the investors.

This leads me to a next-to-final topic — namely, sanctions and enforcement. We have some amazing comments coming out of the east from time to time. Here is the Vancouver Sun, February 7, quoting Ontario Finance minister Greg Sorbara, who's making the case for a national securities regulator. I quote the Sun quoting Mr. Sorbara: "The problem that the Ontario Securities Commission has right now is that in respect of complaints, it has to do all the work. No other commission really has the capacity to investigate."

Well, that's an interesting comment, Mr. Sorbara. Have you ever visited Vancouver? The Vancouver Sun article points out that in fact as recently as Friday, the B.C. commission announced fines and costs totalling $20,000 against Vancouver-based company ALTURA Growth Fund. Well, I won't complete the sentence.

I guess the theory among some persons is that the heavy burden of policing the national securities market is carried by those good people back east. The reality, of course, of the current situation — as I think the action against ALTURA illustrates, and even more significantly as proposed in the new legislation as outlined by the minister just now — is quite the opposite.

Bill 38 contains prohibitions against misrepresentation, fraud, market manipulation, unfair practices, trading on inside information and frontrunning. Anyone who contravenes these prohibitions will be exposed to administrative and criminal sanctions. The minister has already pointed out the maximum administrative penalty has been increased to $1 million.

The Securities Commission is authorized for the first time to order disgorgement of ill-gotten gains. What does that mean? The problem, of course, in the past was that frequently some of the highbinders who are attracted to this business can engage in unethical and, frankly, illegal conduct. They make so much money that the subsequent fines are just a slap on the wrist. It would be much more compelling as a punishment to say: "You've gotta give back all that ill-gotten gain." That's exactly what the bill proposes to do through disgorgement. I like that phrase — something like trying to get a hook out of that fish you went fishing for.

The maximum fine the Provincial Court may order for conviction of an offence under the legislation is increased to $3 million. Higher penalties for insider trading. Investors under the new legislation will have broader rights to sue. The minister has described some of this already. The new act also contains a process for investors to make claims against ill-gotten gains under commission or court orders.

G. Hogg: It is my pleasure, on behalf of the member for Delta South, to welcome 41 residents of her riding, and students from South Park Elementary School. Could there be a better name for an elementary school than South Park Elementary School in Delta South? [Applause.]

There are students, teachers — Mr. Brown and a student teacher, Mr. Kirkham — and many parents who had many exciting ideas in terms of the many contributions that MLAs make to the betterment of life in this province. I asked one of the parents, and they were able to say that MLAs really do make contributions because they represent the people of their riding. The students were wonderful in their photograph. They were able to wave to the member for Delta South who is back in Tsawwassen today.

So, on behalf of the House, I wish to welcome you and ask all of the members in the House to give them a raucous welcome to the Legislature.

R. Sultan: Continuing the description of the sanctions included in this legislation — which the minister, I think, has appropriately emphasized in introducing the bill — the bill gives the Securities Commission the power to conduct full compliance reviews of all public issuers and persons related to them such as due diligence providers and mutual fund managers. This is a great expansion of scope. Under the current act, the commission can do compliance reviews of registrants such as investment dealers, but the power is now being expanded. I think market participants will applaud.

The bill clarifies and expands the civil liability provisions relating to insider trading, as the minister has already described. The bill allows the commission, without a hearing, to impose sanctions on persons found by other securities regulators to have contravened securities laws. I think we all would say amen to that. This is a very interesting one-two punch. We are eliminating a lot of the red tape. We're not cutting the red tape lengthwise, as one cynic suggested governments do. We are cutting red tape, but at the same time, the sanctions and the scope of the sanctions are being very, very seriously increased.

One of the great icons of portfolio management in Canada is Steve Jarislowsky of Jarislowsky Fraser Ltd. in Montreal, Quebec. Steve in his evidence to the Wise Persons' Committee said: "The greatest weakness of the regulatory system is that it does not protect investors…. There is ever more red tape and no real enforcement. The crooks rarely go to jail…."

I would second that observation. I think all the rules in the world will not have the salutary affect of a good shot of someone being hustled into the paddy wagon in handcuffs from that financial tower, be it on Howe Street or Bay Street. I must say, that is a big lesson, and no phalanx of securities lawyers can achieve as much so quickly. I think perhaps we've been guilty of some circumspection in that regard ourselves, because people do outrageous things and are not held seriously to account.

A final point on sanctions. There's this interesting poll I might just refer to in the Financial Post on Wednesday saying: "Four-fifths of business leaders think mutual fund managers who partake in illegal trading practices in Canada should be criminally charged, a new survey has found." This is the business leaders' opinion, calling for stiffer sanctions. Well, the Securities Act, as it is being modified, will certainly give the regulators the tool to accomplish what the CEOs are calling for in that interesting poll.

To conclude on a philosophical note for a moment, I again refer to my learned, anonymous friend, who communicated to me:

On that final note of the quote, I suppose this person would agree with the Wise Persons' Committee, who said things must change. In my opinion, the only problem is they didn't get it right and we are.

To conclude, let's just stand back again and look at the strategic context. Here we are, four million people living in God's paradise on the rim of the Pacific Ocean — hoping that tectonic plate doesn't move. We are doing something very innovative and unusual in a global sense.

I happened to turn on the television the other night, and who should be there on the tube but Prof. Michael Porter of the Harvard Business School. He was just a young lad when I was there. I didn't realize how famous he would become or maybe I would have been nicer to him. He's become, you know, a $25,000 speech consultant these days. With typical Harvard modesty…. Somebody said: "Well, you're so smart with all these books you're writing, do you think you could actually run a company?" He said: "I'm involved in quite a few, you know, and I think I could." Well, I've got news for him. He is very bright — no question about it.

What he was talking about — and he's written about Canada and our situation up here from time to time — was a useful reminder of a strategic mind-set that we should embed into our own approach. It has relevance for the Securities Act. He made a couple of points, one not particularly relevant. Well, I guess it is relevant to the Securities Act. Higher income derives from higher productivity. It's not through going on the picket line and saying: "I need $2 more an hour." That doesn't raise incomes across society. It might redistribute them. The way you raise incomes in society is through higher productivity. The Securities Act, incidentally, promises higher productivity. I think we'd vote for that.

It occurred to me that the main reason it might be worth referring to Michael's ideas was his continued reference, as he looks at companies and nations competing with one another, to what he calls the "value chain." Enterprises, whether they're entities such as British Columbia or entities such as the General Electric Company, operate value chains. They take inputs — labour, capital, raw materials — they do something with it, and they sell it to somebody. That's a value chain. The way they succeed is that their value chain is more efficient. They produce more for less than the competition does. He said there are lots of ways of playing the value chain strategically. The thing that rivals must not do is to try and just copy the value chain of their competitors or the market leaders. That's a mug's game — just to play catch-up.

In my mind, the message was: if we think we're going to make our capital market and financial regulatory system in British Columbia work like a charm by copying what they're doing in the east, well, we'd just become a minor subdepartment of that enterprise run by Barbara Stymiest, I suppose, at the Toronto Stock Exchange. This is not exactly a very enthralling role to aspire to.

More particularly, if Canada figures the way to really get our securities market rocking and rolling in this country is to create another securities and exchange commission with one national regulator and all the apparatus of those 15-foot-long shelf of rules that you have to hire very high-priced lawyers to interpret…. Is that the route to the new Jerusalem for the capital markets of Canada? Michael Porter would say: "Hell, no, that would be the dumbest thing to do. You've got to come up with a different value chain and do it differently. Go after your niche, develop for that niche a better value chain than your rival, and you will win."

To go nose to nose and copy the Americans is about the dumbest thing one could think of. We're not going to win that game. Similarly, if we in British Columbia just emulate or, even worse, agree to become one small component in some larger value chain, which happens to be emulating the United States, operated out of east-

The futility of the U.S. model for British Columbia is that it is the U.S. model. The utter futility of the Ontario model for British Columbia is that it is the Ontario model. The western opportunity is to swallow those rather unkind things they said about us in Alberta and combine with them in a new western Canadian approach to securities regulation that is different — and that's precisely what we have in B.C.'s Securities Act — and along the way, in fact, pick up some encouraging support from Quebec. They have run their own value chain, to our dismay from time to time, but are very supportive of this way of thinking — and one that I think we are in tune with as well.

To conclude, if we can create our own approach, do it so well that others find it difficult to copy us, I think we will exceed very, very well. It fits the sorts of things we do in British Columbia. We're very good at starting smaller enterprises. We don't have big head offices. We're going to invent our own. Perhaps through the history of entrepreneurial finance in the mining industry, we created a mind-set as to risk-taking — the ability to separate the wheat from the chaff — which has now been utilized in fields as far removed from those penny mining stocks as biotechnology and biopharmaceuticals.

I think we have an opportunity here in British Columbia to support this entrepreneurial wave that has been set into motion and accelerated under this government, with the thrust of its legislative initiatives, on to greater and greater economic success. And I think B.C.'s Securities Act presented this morning by the Minister of Small Business and Economic Development is a major, major step forward in furthering the prosperity of all British Columbians.

L. Mayencourt: I want to begin by saying that I really enjoy it whenever the member for West Vancouver–Capilano gets up and speaks in this chamber, because he does such a good job of it. It's very inspiring. I want to tip my hat to you, sir.

The issue that we're looking at today is around Bill 38, B.C.'s new Securities Act. I'm standing here today because I want to support this bill. Bill 38, in short, is a streamlined, simplified and plain-language approach to securities regulation that introduces important changes to the regulation of securities in this province.

The current system imposes costs on public companies and security firms that are higher than necessary. At the end of the day, those costs are always passed on to someone, most likely the investor. The province has crafted a system that will provide better protection here for those investors, doing it at a lower cost.

The new Securities Act reduces a bunch of bureaucratic paperwork and leaves behind a lot of the overused and detailed prescriptive rules in favour of a results-based approach. It is founded on time-tested principles, investor protection, disclosure to investors and the regulation of dealers and advisers. It mandates an improved plain-language disclosure and provides for increased enforcement powers and stronger sanctions and penalties that give broader remedies for investors to sue for damages. The member for West Vancouver–Capilano articulated those very well.

We're here today because securities legislation needs reform. The current system is just too complex, and it imposes costs on investors, companies and securities firms that exceed the benefits of investor protection. Technological advances have made some provisions obsolete. I think the member from West Vancouver said a few moments ago that we're dealing with a Securities Act where the rules were created in the 1930s.

The new Securities Act reduces the bureaucratic paperwork. It leaves behind the overuse of detailed and prescriptive rules in favour of a results-based approach. It is there to provide security and safety to investors and also to provide for the regulation of dealers and advisers.

The new Securities Act represents a straightforward approach to regulation. It is results-based for securities regulation that provides concrete protections to investors and immediate and long-lasting benefits to industry. I'll give you a couple of examples. Plain language. This legislation and guidance are written in plain language so market participants will know what is expected of them on both sides. Even more importantly, market participants must draft a disclosure that they give to investors and to clients in plain language so it is understandable and achieves its intended purpose.

In the area of public disclosure, public companies must make all material information available to investors at all times. The model is designed to give investors complete and up-to-date information about the companies they invest in, whether or not the company has recently filed a prospectus. There is a statutory right of action for investors to sue companies that make misrepresentations on their disclosures.

It provides a code of conduct. Registered dealers and advisers must comply with a code of conduct, a results-based set of rules that imposes requirements designed to ensure that their clients are treated fairly, served competently and told all the important facts about fees and conflicts of interest. Also, we have the industry here responsible for training. Individual representatives of dealers and advisers are no longer registered, but the code requires firms to hire only those who are suitable to work in the industry, to see that they are properly trained and to supervise them properly.

So what does this do for investors? The new legislation is stronger than the one that exists today, and it's designed to strike a balance between effective deterrence and the cost of compliance. But this is only one of the elements of the new legislation that improves investor protection. There are many others — including that disclosure by public companies to investors must

be more comprehensive, more current and in plain language. Disclosure by securities firms to their clients must be more specific in the areas of fees and conflicts of interest and also must be in plain language. Investors have improved remedies — the right to sue for misrepresentation in continuous disclosure documents and to sue those who trade on inside information.

Anyone who believes that another person has contravened the legislation can ask the commission to hold a hearing into the matter. The commission and the courts have new powers to order wrongdoers to disgorge profits made from illegal activities. This is something that really struck the previous member. It was a nice term, "disgorge." It means, basically, that you've come by this money dishonestly, and we're going to get it back from you. I think that is a very important part of this. Investors that have lost money as a result of the wrongdoing will have an opportunity to recoup their losses from the disgorged funds. It's not just that the Securities Commission is going to take the money back. It's also going to make sure that if investors have been harmed, it will do its best to make them whole again. The commission and the courts have stronger enforcement powers to deal with those that break the rules.

So how is it going to affect businesses? The changes will save companies money and speed up their access to capital markets. For small companies that don't have the benefit of expensive in-house experts and advisers, regulations can take up to 70 percent of management's time. Simplifying and making rules more effective and efficient clears the way for entrepreneurs and companies to focus on growing their business. It's more efficient because companies will be able to raise capital faster, at a much lower cost. Detailed and prescriptive requirements for securities firms have been replaced by a results-based code of conduct, and other rules have been streamlined. Individual representatives no longer require registration, as long as they work for a registered firm. Individuals must comply with the code of conduct and meet the proficiency requirements and are subject to all enforcement provisions.

Now, a question is: will this approach increase costs for public companies because they have to comply with special rules? As I said a little earlier, everything that costs a company and firm in terms of compliance eventually comes back to the individual investor. So it's important to have that answer. The answer is that those who are eligible to use the legislation to raise capital will be free to do so, and those that don't, whether or not they're eligible, will not be compelled to follow B.C. rules in this approach.

The new legislation will be made compatible with the legislation elsewhere in Canada through the use of harmonized interfaces in the proposed rules. Essentially, these will provide exemptions from the requirements of British Columbia legislation for those who are required to follow regulatory requirements elsewhere in Canada and who comply with those requirements. As a result of these interfaces, market participants will generally avoid having to comply with two separate or two different sets of requirements.

We talked a little bit about deregulation as well, and I think this is very important. I think one of the things we find with regulatory burden is that it just seems to pile up and up and up. Eventually nobody's really sure why the regulation is there, what it was meant to do, who it's going to protect, if it's obsolete or what have you.

This new legislation goes a long way towards supporting our government's new-era commitment to reduce red tape and eliminate unnecessary and burdensome regulation. The reduction in securities regulation requirements will exceed the government's one-third reduction, yet investor protection is improved and enforcement is strengthened.

You know, scandals like Enron occurred despite the very prescriptive securities regulations in the United States and show that those committing fraud can thrive in a rules-based system. The real issue is developing regulatory responses that deal adequately with the issues in the context of each market. We believe the best regulatory response is the one that will get the best results for investors while placing the minimum burden necessary on market participants. Sometimes that means enforcing rules already in place; other times it means new rules. It does not necessarily mean adopting the rules or approaches of another jurisdiction for the sake of conformity, especially in the absence of any evidence that those rules will produce the desired regulatory outcome.

There are a number of specific enforcement measures that this legislation provides for. There are prohibitions against misrepresentation, fraud, market manipulation, unfair practices, trading on inside information and frontrunning. Anyone who contravenes these prohibitions will be exposed to administrative and criminal sanctions. Frontrunning is where a firm trades ahead of its clients in the shares that they oversee for them. Compliance and enforcement powers are strengthened. The commission staff will have broader powers to obtain information from market participants, and the commission will have broader powers to ban market participants from the markets and order disgorgement — that good word again.

The maximum administrative penalty that the commission may order is increased to $1 million per contravention of the legislation. Now, the courts have a role here as well, and the maximum fine the courts may order for an offence under the legislation is increased to $3 million. The court may also make restitution and disgorgement orders against a person who commits an offence. Higher penalties apply in insider trading places.

Anyone who believes that another person has contravened this legislation can go to the commission and say: "I want to have a hearing on this." Investors under the new legislation can sue market participants on three counts under the act: misrepresentation in offering and bid documents and a company's continuous disclosure; illegal insider trading; and frontrunning.

Our province is very much committed to working on reform with other provinces, and we believe that structural reform of securities regulation is worthwhile. We intend to continue to work with other governments on reform of the system. B.C. also believes that streamlining this substantive law, as this legislation does, is equally important, if not more so.

British Columbia helped establish the committee of ministers to look at the structural reform of securities regulation and continues to support the work of the committee. Sometimes you've just got to get on with it — I guess that's the message here, Mr. Speaker — and British Columbia is doing that.

A major objective of bringing in new legislation in B.C. is to show that a better way of regulating is possible and sensible. By demonstrating in British Columbia how the system works, we hope that other provinces will come to understand that the ideas in the new legislation should be included in any securities legislation. We're going to continue to work with other provinces and their regulators to explain the benefits of this new legislation and the importance of looking at substantive securities reform as well as structural reform as we move forward.

This is a result of a grand consultation in British Columbia. The B.C. Securities Commission developed the new legislation through a disciplined zero-based analysis of the current law. The commission was asking: what problem was each requirement designed to address? Is it still a problem? Is there a better way? The commission then consulted with more than 2,000 people in B.C. and across Canada who would be affected by the law. Public company directors, dealers, advertisers, lawyers and accountants joined focus groups, attended seminars, completed surveys, responded to regulatory impact studies and wrote comment letters between March of 2002 and November of 2003.

In addition, the commission conducted regulatory impact studies in four key areas: the continuous market access system, code of conduct, investor remedies and firm-only registration. The commission also analyzed the new regime to ensure that it was enforceable in practical terms and that it conformed to international standards of securities regulations.

The bill does a number of things. There are stronger enforcement powers, with prohibitions against misrepresentation, fraud, market manipulation, unfair practices, trading on inside information and frontrunning. Anyone that contravenes these is subject to administrative as well as criminal sanctions. As I said a little earlier, the maximum administrative penalty from the B.C. Securities Commission is increased to $1 million. If they go to court, the court may order for conviction of an offence under the legislation, to the amount of $3 million, and the court also has the ability to do this great disgorgement order against people who commit the offence. Higher penalties apply in insider trading.

It's enhanced investor protection. Investors have broader rights to sue than they have today. They will be able to sue market participants for misrepresentation in offering and bid documents and in news releases, other disclosure documents and oral statements by company officers. Investors will also have improved remedies for damages caused by illegal insider trading or frontrunning. The new act also contains a process for investors to make claims against ill-gotten gains under commission or court orders.

The act contains provisions to enable a new system of capital raising that takes advantage of Canada's high disclosure standards. B.C. investors can look forward to increased investment opportunities as public companies in B.C. use the continuous market access system to raise capital on the strength of their continuous disclosure record. The new registration system enables the code-of-conduct approach to compliance amongst registered dealers and advisers — and to introduce firm-only registration. The new principles-based registration system is designed to focus market participants on what's right for investors while lowering the cost of regulation.

This legislation incorporates some very significant changes to key elements of regulation, many of which were designed in the 1930s, to fit the needs of today's markets and investors. The new legislation replaces the outdated prospectus disclosure system with a streamlined public offering process based on a requirement for public companies to disclose all material information at all times. It puts investors in public companies on an equal footing, whether they buy their securities from a company in a public offering, in a private placement or in the market, from other investors.

It replaces a large number of the detailed rules about behaviour with an outcomes-based code of conduct for securities dealers and advisers and their representatives. And it eliminates the requirement to register individuals in the securities business — more than 20,000 of them in British Columbia — through a system of firm-only registration. This system holds employers more clearly accountable for the proficiency and conduct of their representatives but keeps representatives subject to disciplinary action for misconduct.

The complete legislative framework consists of the act, rules and forms. The rules, which complement the act, will contain more detailed, though still results-based, regulatory requirements. In the act are two of the major changes to the regulatory system: increased administrative and quasi-criminal sanctions, and enhanced investor remedies. The rules will contain the specific provisions for the other three major changes: the continuous market access system, a code of conduct for dealers and advisers and firm-only registration.

The streamlined and simplified plain-language approach is reflected throughout the act, and this approach will be followed in the rules. The securities commission will publish the rules, forms and accompanying guidance for public comment in the coming months, and the framework is expected to be in force by the end of 2004.

I think that every one of us has friends and family, neighbours and business associates that invest in the markets. They are entitled to have the best kinds of

rules in place to make sure that they're protected, so they're not subject to fraud and someone's not making off with their cash.

I think it's very important that we take forward from this bill and explain to the people of British Columbia that this bill is actually designed to get the result you want. We want to stop fraudulent activity. If it happens, the commission can provide sanctions and the courts can provide sanctions. These guys — the bad actors in the business — could lose the money they made. I think that's very important.

In my riding of Vancouver-Burrard I have an awful lot of people that are…. They live in my riding, and they have small investment portfolios. These types of investors — whether they're seniors, newly immigrant families or what have you — need to know in pretty straightforward terms that we're going to back them up. That's why I really support this plain-language approach to it.

I think that the B.C. Securities Commission has done a wonderful job of consulting with industry stakeholders. I think that when we read this act and when we look at it and talk about how the securities firms have to communicate with their investors, what it tells them is that they've got to do that in plain language. It's got to be understood by, you know, a 70-year-old librarian or a 22-year-old snowboarder. I think the point here is that we're trying to make so much of the legislation here do things that make it ordinary for people, so that people can understand it.

We're also doing something important for the business community with the deregulation — cutting some red tape. We've had an unbelievable growth spurt in the last three years, thanks to many of the things that we have done. There are people here that are interested in investing in British Columbia. They're interested in supporting companies in our community and all of that. We have a lot of work to do in terms of getting rid of some of the regulatory burden that was imposed on these folks over the past several decades.

It sounded to me that when the member for West Vancouver–Capilano was speaking, he said: "It's not time to make an addition to this creaky old house. It's time to sweep it aside and build on a new foundation. It's time to start afresh." This bill does that, so I support it, and I know it will make a big difference for people in my community.

I want to make other members aware of one thing that has come my way from the B.C. Securities Commission. They have already come to me and asked me if I want to host a forum for investors in my riding so that they will become familiar with any new changes that are brought in under this act. I know that is going to be a terrific way for the Securities Commission to reach out, touch people, tell them about the plain language, tell them about the protections that exist and tell them that we're there to protect them. If they think they're being hoodwinked, they can go right to the commission. They can say, "I want a hearing," and they will get it.

Hon. R. Thorpe: It's a pleasure to rise in the House and speak in favour of Bill 38, the Securities Act. I want to congratulate the Minister of Small Business and Economic Development, the member for Chilliwack-Sumas, for bringing this bill into the House. I'd also like to recognize the now Minister of Transportation, the member for Surrey-Cloverdale, who also worked very, very hard on the preparation of where we are today.

I might add that when our government was sworn in, I initially had the responsibility for the Securities Act. I have to say that when the Premier gave us the direction of looking at our securities regulation and legislation in British Columbia so that it could be part of another one of our economic engines of driving the economy of British Columbia, I was pleased to start the process and work with these other members of the House.

But these things do not happen by themselves. I think we should pause for a second and recognize the public servants at the B.C. Securities Commission and also the staff in the Ministry of Finance who worked with the staff at the B.C. Securities Commission, because they have worked and been very focused. In fact, this new act is designed to replace a securities act that was enacted in 1985 and based on Ontario legislation from the 1970s. The current act and related rules have been amended and augmented over the years in response to continuing changes of markets, resulting in a very complex, concluded legal structure.

Without question, securities regulation and processes are complex. Those are the ways of the past. It's a new world. We need leadership in this area. I'm pleased to be part of a government led by this Premier who is prepared to take that leadership position, to bring forward an act that focuses in on streamlining and simplification of British Columbia securities legislation. It is positive. It is a forward-looking initiative that can lead not only British Columbia but Canada to a better way to regulate our securities market.

This new legislation addresses the problems of security regulation that is just so complex with so, so many regulations. It is important to understand that this new legislation contains five broad initiatives, as other members of this House have spoken about. As legislators, our key responsibility, the number one area, is enhancement of investor protection. The second point is streamlining our capital raising abilities within the province.

That is important as our economy continues to grow, providing opportunities for our new sectors and our traditional sectors, to ensure that as we unleash the power of the private sector, they have the ability to have the capital that's going to feed those engines of growth, resulting in community growth and job creation.

The third leg is the code of conduct for dealers and advisers, and the fourth is firm-only registrations. The fifth, as other speakers have mentioned, is the simplification of legislation into plain language. The new legis-

lation looks different from the current law, because it is updated, simplified, streamlined and written in plain language.

It's important to understand how we got to the point we are at today with Bill 38, the Securities Act. I had the privilege of working with the staff at the Securities Commission at the time when they laid out their multi-year plan on how they would build their blueprint to move through this in a thoughtful, deliberative, consultative manner. It was a major undertaking, but one on which, as I've said earlier, our Premier challenged us. Our Premier challenged us to lead. Our Premier challenged us to come up with a new way of doing business in the securities area so that British Columbia could lead.

The Securities Commission laid out a very detailed, zero-based review of securities legislation. They questioned every regulatory requirement, and they developed four styles of change. First, could it be eliminated? Were these obsolete or redundant requirements? Second, could the requirements be re-crafted to better achieve their purpose? Third, could we simplify requirements and put them in plain language? And fourth, were new requirements required to fill existing gaps as the world changes and as the securities situation changes?

This new legislation, coupled with the rules that will be published for comment later in the spring, will reduce the regulatory count in securities in British Columbia — in excess of 7,000 regulations — cutting red tape, streamlining processes and making it easier and more understandable for investors and at the same time providing opportunities for market participants who manage and raise funds as well as those who need funds. Someone in Canada has to lead, and British Columbia is leading. We're leading in simplification; we're leading in streamlining; we're leading in protecting investors.

We've encountered some challenges, and we've worked through those challenges. Now we have opportunities to assert British Columbia's position in the national debate as a means of broadening the focus from just purely structural reforms to the more important area of adopting a streamlined and simplified approach to regulations and rules that are right for Canada's markets today — not for yesterday but for today and, most importantly, for tomorrow and into the future.

This new legislation is a better tool for protecting investors and the kinds of regulations that are best for all of Canada. I can remember three winters ago, during my Christmas vacation, being in sunny Mexico on the beach when the Enron scandal broke. I can remember preparing a note for the chair of the B.C. Securities Commission at the time, for delivery when I got back home, on how we should make sure that those types of situations do not happen in British Columbia and that we have safeguards in place to protect our investors.

I believe this new act provides the very best protection for our investors. This positions British Columbia as an innovative leader that wants to be constructively engaged with the other provinces of this country in securities regulation reform.

In fact, we led in forming the ministers committee from other jurisdictions. I can remember that very first meeting in Toronto when British Columbia, Alberta, Ontario and Quebec got together to forge a committee of ministers challenging the federal government to stay out of provincial jurisdiction so that so we could show them how provinces could work together through streamlining and simplification. Now British Columbia comes forward as a leader.

But this was not done in isolation. The B.C. Securities Commission went through exhaustive consultations, not only in British Columbia but in all of the major regions of this country. They did it time after time. There were those cynics out there who can't handle change who said this would never happen. I take my hat off to the current minister, to the Securities Commission staff and to the Ministry of Finance staff for having the commitment, the creativity and the innovation to proceed and achieve the goals that will truly make British Columbia a leader.

As I've said, this new Securities Act better protects British Columbia's investors and improves British Columbia's business climate. These new regulations reduce paperwork and bureaucratic rules in favour of a results-based approach. It is better for disclosure to investors, and it's better for the regulations that monitor dealers and advisers.

The new legislation strengthens investor protection through results-based regulations that focus companies and security firms not on rote compliance with detailed procedures but on what is best for investors and fair markets. It mandates improved plain language disclosure, provides for greater increased enforcement powers and stronger sanctions and penalties.

When those that break the law break the law, they should have a penalty that teaches them and other people in the marketplace a lesson. It should not be a cost of doing business. It gives broader remedies for investors to sue for damages.

The current system imposes costs on public companies and security firms that are higher than necessary and that in some cases exceed the benefits of investor protection. Since the investors ultimately bear the cost of regulation, we have crafted a system that will provide better protection at a lower cost. Bill 38 is a streamlined, simplified, plain-language approach to securities regulation.

Stronger enforcement powers. This act contains prohibitions against misrepresentation, fraud, market manipulation, unfair practices, trading on inside information and frontrunning, and anyone who contravenes these prohibitions will be exposed to administrative and criminal sanctions. The maximum administrative penalty that the commission could order increases to $1 million per contravention.

The Securities Commission is authorized for the first time to order disengorgement of ill-gotten gains,

and those benefits will flow to the investors, where they should flow. The maximum fine that the Provincial Court may order for convictions on an offence under this legislation increases from $1 million to $3 million. The courts may also make restitution and disgorgement orders against a person who commits an offence. Higher penalties also apply for insider trading.

What does it do for the investor? It enhances their protection. Under this new legislation, investors will have broader rights to sue than they have today. Investors will also have improved remedies for damages caused by illegal insider trading or frontrunning. The new act also contains a process for investors to make claims against ill-gotten gains disgorged under commission orders.

As we have seen significant gains in the economy of British Columbia, the streamlining for raising capital is a further tool for the private sector in British Columbia to raise capital. This new act contains provisions to enable a new system of raising capital that takes advantage of Canada's high disclosure standards. British Columbian investors can look forward to increased investment opportunities as public companies in B.C. use the continuous market access system to raise capital on the strength of their continuous disclosure record.

A new registration system for securities dealers and advisers — this act provides for that. It enables us to have a code-of-conduct approach to compliance among registered dealers and advisers and to introduce firm-only registration. This new principle-based registration system is designed to focus on market participants, on what's right for investors, while lowering costs of regulations.

This streamlined and simplified-language approach is reflected throughout the act, and this approach will be followed by the rules. The Securities Commission will publish those rules, forms and accompanying guidelines for public comment in the coming months, and it is expected that those will be in place by the end of 2004.

When we had the opportunity to form government, our Premier committed that our focus would be on growing the economy and on growing it in all parts of the province. The test would be: are people — and more people — working in British Columbia? Our economy is performing, and this new act gives us further fuel to drive forward.

You know, all too often we forget to pause and recognize the achievements that British Columbians have achieved by working together. In building our province, the confidence level of British Columbians with respect to their economy has never been higher. We are seeing record earnings from the B.C. credit unions, another signal that throughout the province, the economy is growing. We are seeing our exports outpace the national average. We are seeing home sales hit an all-time high, with a record-breaking month in March 2004. We are seeing housing starts in British Columbia at a ten-year high.

Yes, we've created — not as government, but British Columbia, the private sector — 130,000 new jobs since December 2001. In the latest Canadian Federation of Independent Business survey, small business in British Columbia has the highest degree of confidence of any jurisdiction across all of Canada as we move forward. And yes, all those people that moved out of British Columbia in the 1990s are now starting to move back as they see the opportunities. The investment dealers are saying that the year 2004 is going to be a great year in British Columbia. They cite strong job creation, construction activity, planned improvements and improved exports.

Of course, Mr. Speaker, we also made a commitment to British Columbians to get our financial house in order. We said we'd do that over a three-year period. Yes, we had to make some tough decisions, but you know, we have a balanced budget in British Columbia. We have three that were tabled in this House in February. What has that done? That gives us, as it does in our homes or in our small businesses, the flexibility and the option to have choices. It also sends a message to the financial markets of the world that not only did we say we were going to do this, but we've actually done it.

We've seen benefits accruing to the citizens of British Columbia through Standard and Poor's bond rating and through Moody's, who have moved their ratings on the bond cost for British Columbia from stable to a positive outlook. What's the benefit of that? It's $200 million to British Columbians. That gives us more flexibility and the opportunity to make more choices and more changes as we go forward.

This bill will help us continue the momentum and growth that our Premier challenged us to achieve. We are now, through this bill, going to be leading in Canada, and we are going to be encouraging other governments that British Columbia wants to work with them in reforms and security reforms. British Columbia believes that streamlining the law, as this legislation does, is important. British Columbia helped establish the committee of ministers to look at structural reform, and we are achieving our goals.

Securities legislation in the province needed reform. It needed less red tape and less bureaucracy. It needed to be in plain language. All of those things are achieved in the Securities Act, Bill 38. It was also important to think about and remember our investors. This new act represents a straightforward approach to regulation. It's a results-based model based on securities regulations that provide concrete protections to investors and immediate and longstanding benefits to the industry. It's important that we're moving forward.

I am proud to be standing and speaking in favour of this bill, as this protects British Columbia investors and improves British Columbia's business climate. This legislation lays a new foundation for a new way to regulate British Columbia and is British Columbia's contribution to the national debate on reforming the regulation in Canada's capital markets. This legislation is the logical next step in adapting to the rapidly changing and highly competitive global environment in which British Columbia businesses operate and in

British Columbia has been developing a new approach to regulation, with a focus on achieving results and eliminating unnecessary costs and burdens. This new legislation formalizes the shift away from imposing complex volume after volume of rules and toward simple, transparent, plain-language requirements designed to protect investors and the markets.

This new legislation, as I've said several times, strengthens investors' protections through increased enforcement powers, stronger sanctions and penalties and through broader remedies for investors to sue for damages for misleading disclosure. Simplifying the rules and reducing the burden of regulation helps make British Columbia businesses more competitive, which benefits everyone in British Columbia.

This bill is yet another tool in the toolkit of building the economy of British Columbia for the future. It's about bringing out all of the very best in British Columbia. It's about having the opportunity to provide capital to expand and once again get the mining industry in British Columbia up and running. It's about providing the opportunity and additional streamlined approaches for our forest industries to access capital as we continue to have to compete in the global marketplace. This bill gives better opportunities for our new emerging industries like biotech and our continuing-to-grow industries of high-tech and tourism — opportunities to operate in a much more streamlined, efficient manner.

Yes, we were challenged by the Premier to lead and to bring forward new, innovative, creative approaches that would result in benefits to all British Columbians. That was the political challenge. This bill answers that, but it could not have been done without the dedication, hard work and thoughtfulness of the employees at the B.C. Securities Commission and the employees and public servants at the Ministry of Finance who have worked so hard on this.

It's with real pleasure that I see the results of three years of work tabled in Bill 38. I am proud to say that I will be voting in favour of this bill. You may have gathered that, Mr. Speaker.

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Official Report of

DEBATES OF THE LEGISLATIVE ASSEMBLY