Protecting the Capital Markets from Criminal Activity

• Author: Anita Indira Anand
• Pages: 115-122

115

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Protecting the Capital Markets from

Criminal Activity

Much of this book focuses on securities regulation, an area of law

that has historically fallen under provincial jurisdiction and aims to

protect capital markets and the investors that populate them. This

system of regulation is central to governments’ eorts to protect

investors. However, securities regulation is not the only area of law

with a role to play in bringing order to the capital markets.

Canadian criminal law, which falls under the constitutional

authority of the federal government, includes many prohibitions

on dishonest conduct in the nancial sphere, including fraud and

insider trading. These prohibitions are premised on the idea that,

if someone harms another person by taking something to which

they have no right, that person should be penalized — whether that

person has snatched someone’s wallet or sold shares by lying about

a corporation or investment rm. Few will question the validity of

this basic assumption. Strangely, though, criminal law has infre-

quently been used in Canada to prosecute nancial crimes, even

though the law on the books is comprehensive.

Criminal Law Versus Securities Regulation

The basic function of criminal law is dierent from that of securities

regulation, though there is overlap between the two. Criminal law

1 Criminal Code, RSC 1985, c C-46, ss 380 and 382.1.