The most widely read magazine for Canadian lawyers
Issue link: https://digital.canadianlawyermag.com/i/50094
Not surprisingly, in 1990, when it came time for him to move on from the com- mission and return to private practice, no Bay Street law fi rm would hire him. "I was essentially blackballed by a number of fi rms," he recalls. Eventually Groia land- ed a job with the Montreal fi rm Heenan Blaikie LLP, where he stayed for 10 years "We believe the number of companies we found actually understates to a significant degree the level of options manipulation in Canada." — DIMITRI LASCARIS, SISKINDS LLP working out of their Toronto offi ce, be- fore opening his own litigation shop. And since leaving the OSC, he's emerged as one of the most aggressive and sought- after securities litigators in the land. Now defending people accused of corporate fraud, his client roster includes the likes of Cinar, Hollinger, Philip Services, York- ton Securities, and Thomson Kernaghan. Moreover, Groia's opinion of the OSC has changed: he believes its power should actually be clipped, and complains that too many people are calling for more regulation. "I see a very alarming corpo- rate vigilantism where you have the false perception that regulators are not doing enough and there are people who are try- ing to fi ll in that gap," he says. Groia's schizoid career is in keeping with Canada's equally schizoid history of enforcing securities laws. Right now, the general consensus is the enforce- ment system is ailing, if not completely dysfunctional. Indeed, if Bernie Ebbers had started WorldCom in Alberta, where he grew up, instead of Mississippi, he would likely be living in quiet retirement instead of wearing an orange jumpsuit courtesy of the U.S. prison system. While the likes of Enron's Jeffrey Skilling and Tyco's Dennis Kozlowski are behind bars with lengthy sentences, in Canada the 44 JANU AR Y 2008 www. C ANADIAN Law ye rmag.com landscape seems strewn with cases where few have been successfully prosecuted, or are instead being pursued by Ameri- can regulators and enforcers rather than their Canadian counterparts. There's Bre-X, Livent, Nortel, YBM, and Conrad Black, Andrew Rankin, and Ian Thow, a mutual fund salesman who is alleged to have bilked investors at Berkshire Invest- ment Group before fl eeing to the U.S. one step ahead of the RCMP. In fact, the Mounties' Integrated Market Enforce- ment Team (IMET), set up to give some weight in the enforcement arena, has been an unmitigated disaster, laying only fi ve charges despite spending $100 mil- lion since opening its doors in 2003. With one recent study saying that more than one million Canadians have lost money to some form of investment fraud, it's no wonder federal Finance Minister Jim Flaherty calls Canada's regulatory system an "embarrassment" and that, "For many outside of Canada, our system is seen as cumbersome, frag- mented, slow, repetitive, and lacking the proper tools of enforcement." Some lawyers are much more blunt. "For stock market scams to get found out, investigated, charged, and convicted, the chances are pretty slim in Canada," says Wes Voorheis, an attorney and share- holders' advocate who was appointed CEO of Conrad Black's old media com- pany, Hollinger Inc., last April. "It's just this side of pathetic. The [regulatory] system is fucking broken in Canada and needs to be fi xed." Others concur. "As far as I am con- cerned, the system is broken," says Cal- gary lawyer Clint Docken, who once represented Bre-X shareholders in a class action lawsuit. "All we have is civil litigation — which is not the way it's supposed to be." So if Canada is proving to be such a fabulous place for fraudsters, why is this the case? And how much of the blame for this reality falls on the shoulders of the le- gal profession? * * * How bad is Canada's enforcement track record? Utpal Bhattacharya, an as- sociate professor of fi nance at the Kelley