Is a National Securities Regulator Constitutional? Andrew Bernstein and Canadian Lawyer Discuss

March 26, 2018

On March 22, the Supreme Court of Canada heard the appeal in Attorney General of Canada, et al. v. Attorney General of Québec. The trial concerns the potential implementation of a national securities regulator, which would consolidate provincial and territorial securities regulators in order to “better assess and minimize system risk in capital markets” while improving regulatory enforcement.

The Court of Appeal of Québec ruled that the proposed Cooperative Capital Markets Regulatory System is unconstitutional, stating that the authority of the Council Ministers, who would be drawn from each participating jurisdiction, “violates parliamentary policy” and that the Council would have authority over matters of provincial jurisdiction.

When asked to comment on the opposition to implementing a co-operative regulatory system, partner Andrew Bernstein told Canadian Lawyer that “there’s some fundamental assumptions and conclusions drawn by the Québec Court of Appeal that appear to be inconsistent with the structure of the [System]."

Below is an excerpt from the article:

The Québec Court of Appeal concluded that, if they were to uphold the memorandum of understanding for the national securities regulator, they would be permitting the executives of the provinces, through the Council of Ministers, to fetter the abilities of those provinces.

However, says Bernstein, “a general principle of federal law is that Parliament has the last say on what the law is […] It’s always open to parliamentary change […] The executives who have signed these memorandums aren’t allowed to bind themselves as to what provinces will or won’t do." The Québec Court of Appeal found the agreement to be invalid “because it binds the legislature to cooperative capital markets"; but, “you can’t by agreement bind the legislature," he says.

Bernstein predicts the SCC will “set out some limits of what the memorandum of understanding can and can’t accomplish, and then uphold it." The memorandum of understanding is the agreement that will be signed between the cooperating provincial and federal governments, which sets out some crucial features of this system and how it will operate.

To read the full article on Canadian Lawyer, click here.

Interested in further insight from our litigation team? Click here.


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