The most widely read magazine for Canadian lawyers
Issue link: https://digital.canadianlawyermag.com/i/50094
clients. And they often return to those law fi rms when their stints at the securi- ties commissions are fi nished. Moreover, the willingness of law fi rms "As far as I am concerned, the system is broken. All we have is civil litigation — which is not the way it's supposed to be." — CALGARY LAWYER CLINT DOCKEN to keep corporate clients happy no matter what can be seen by the fact that investors and creditors are extracting individual set- tlements from law fi rms by claiming they negligently failed to protect stakeholders who were damaged by corporate calami- ties. Three multimillion-dollar settlements have been paid by Torys LLP, Goodmans LLP, and Cassels Brock & Blackwell LLP for their roles respectively at Hollinger Inter- national Ltd., Dylex Ltd., and YBM Mag- nex International. There was no admission of wrongdoing in any of the settlements. Meanwhile, the current chair of the OSC is David Wilson, who used to be vice chairman of the Bank of Nova Sco- tia and CEO of Scotia Capital. The rest of the OSC board is made up of lawyers from Bay Street law fi rms or senior peo- ple employed in the fi nancial industry. Wilson replaced David Brown, who'd been a long-time corporate lawyer in mergers and acquisitions at Davies Ward & Beck LLP (now Davies Ward Phillips & Vineberg LLP) in Toronto, where he returned when he left the OSC in 2005. Other former OSC chairs include Ed- ward J. Waitzer (Stikeman Elliott LLP), Peter Dey (Osler Hoskin & Harcourt LLP), and former Osgoode Hall Law School dean Stanley Beck, who now sits on many corporate boards, including Scotia bank's Scotia Utility Corp. and Scotia NewGrowth Corp., Canadian Tire Bank Inc., Hollinger Inc., and First Na- tional Financial LP. Meanwhile, Bill Rice, the current chair of the Alberta Securities Commission, worked for 25 years as a se- curities lawyer for Bennett Jones LLP. "I think a signifi cant part of the prob- lem is a lack of political will," says one class action lawyer, speaking on the condition of anonymity. "It's easy to go after people in the boiler room who are ripping off re- tirees, but they don't have any power. But to go after any people who have any power and infl uence requires a very signifi cant amount of political will. It's unrealistic to expect that a chairman of the OSC who aggressively pursues large public corpora- tions won't have their prospects of earning an income after they leave from being di- 46 JANU AR Y 2008 www. C ANADIAN Law ye rmag.com minished. These things are going to come back and have an impact on their profes- sional prospects and that's just reality. And who is not going to be infl uenced by that, unless you're a saint?" Not surprisingly, those who've crossed between the regulators and Bay Street law fi rms disagree. "I haven't seen that [sort of bias]," insists James C. Baillie, a former OSC chairman and a senior partner at To- rys LLP. "It's a nice theory and people criti- cal of the commission make the theory, but my experience is that people who work for regulators are professionals and they want to do a good job and want to be respected for doing a good job when they go back to private practice. . . . If you are expecting that people are reluctant to go after North- ern Telecom, I will tell you the attitude of Bay Street for a bad securities situation where people think things are done wrong is, 'Go get them!' It affects the reputation of all of us, and they applaud when they go after people like that. . . . If people don't trust us, we go out of business." Still, it's hard to imagine any chair of any of Canada's security commissions launch- ing the kind of assault that Eliot Spitzer led against Wall Street between 2002 and 2006. As Eric Reguly of the Globe and Mail noted about David Brown's tenure as OSC chairman, "[His] burden was the in- evitable comparisons to Mr. Spitzer. How could the demure, soft-spoken Canadian possibly compete? There was Mr. Spitzer acting like a latter day Eliot Ness, exposing depraved behavior on Wall Street, in the insurance and mutual funds industries, wrecking careers and exacting billions of dollars in settlements. Mr. Brown couldn't make the same claims." How do the commissions respond to these criticisms? Larry Ritchie, vice chair- man of the OSC (and a long-time lawyer at Osler), says they're aware of the perception that Canada and Ontario are weak on en- forcement. But he dismisses comparisons between the OSC and American regula- tors, saying, "It is a different society and a different political environment." Ritchie also disputes the belief that the Americans are onto cases before the OSC is, adding that, "co-operation amongst law enforce- ment agencies inside and outside Canada is much more effective than competition." What about resources? Do regulators