Bonnie Lysyk, executive vice-president of enforcement at the Ontario Securities Commission, at her office in Toronto.Galit Rodan/The Globe and Mail
Bonnie Lysyk is busy trying to catch financial criminals in the act.
Since joining the Ontario Securities Commission as executive vice-president of enforcement in October, 2024, after a decade as Ontario’s auditor-general, Ms. Lysyk has been focused on fighting fraud. In a wide-ranging interview, the new top disciplinarian at Canada’s largest market watchdog said more pre-emptive strikes are needed.
“Fraud, particularly online harm – that is calling for a different type of action from enforcement versus investigation and the typical treatment through the Capital Markets Tribunal or through the courts,” Ms. Lysyk said. “What we are now having to do is disrupt.”
Right now, the OSC is tackling the issue on a site-by-site basis. Each time investigators discover a fake investment website hawking an obvious scam, the hosting platform is asked to voluntarily take it down. Eventually, the goal is to establish a more automatic online fraud detection system.
“That would involve self-managing their websites, by checking to see that when sites accept money for investments, that those entities are actually registered with the securities commissions across Canada,” Ms. Lysyk said. “We know, for instance, that Google has algorithms that they use to try and detect fraudulent sites, though we don’t necessarily see that with all the platform providers yet.”
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Beyond fraud, Ms. Lysyk said market manipulation and insider trading will also be key priorities for her tenure. Her biggest challenge as the head of a department that receives roughly 2,000 new cases every year, but is only equipped to handle between 120 and 150 active cases, will be deciding which ones to pursue.
“We have a lot more cases coming in than we have the ability to handle,” Ms. Lysyk said. “So our triaging is really important and making sure that we do pick the cases that are the most egregious.”
Her approach to case selection is partially motivated by a desire to improve the OSC’s dismal collections rate. It is currently sitting at just 4.5 per cent, meaning only $4.50 is collected for every $100 in penalties levied. But Ms. Lysyk’s main goal remains protecting investors from unlawfully losing even a single dollar.
Earlier this year, the OSC participated in Operation Avalanche, which was led by the British Columbia Securities Commission. That initiative also sought to prevent wrongdoing before it occurred by warning specific investors who were determined to be potential victims of crypto fraud.
“We identified people’s wallets that had been compromised, or were looking like they were going to be compromised,” Ms. Lysyk explained. “The platform providers gave us contact information for those individuals and we were able to proactively reach out to them and let them know.”
In situations where victims have lost money, Ms. Lysyk said the key to improving the OSC’s collections rate will be the initial decision on how to handle the case.
“For instance, if the money is all gone and the fraud has been committed, and there will be no money disgorged to people, then perhaps that file is best handled through the criminal route,” she said.
“Even if it went through the tribunal route and there was a disgorgement order, there might not be any assets to liquidate to refund money to those harmed.”
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The OSC will still handle cases where it might not be recovering money, because it sends a message and brings closure for people, Ms. Lysyk said.
However, she also noted settlement agreements tend to have much higher recovery rates than disgorgement orders, suggesting that could be an avenue to increase what the regulator is able to collect.
Door knocks are another prevention tactic her team plans to keep in place. Those involve cases where no formal investigation will take place, but a member of the RCMP will join an OSC staffer to have an in-person conversation that “would deter the parties from continuing what they are doing,” Ms. Lysyk said.
Aiming to make it more difficult for wrongdoers to hide assets abroad, Ms. Lysyk’s team is placing more emphasis on the OSC’s global partnerships through its membership in the International Organization of Securities Commissions.
“Sometimes our work requires us to reach out to another country to get information, and that is something we are seeing more of,” she said. “There are some countries where we can get phone records, bank records, they can conduct interviews on our behalf or vice versa. That will be an important focus down the road.”
In order to achieve her goals, Ms. Lysyk plans to ask the province for new investigatory tools. It would be premature to share specifics, she said, though an increasing amount of her resources will go toward preventing financial criminals from harming investors in the first place.
“Disruption will likely play a larger role into the future,” she said.