Meet Huston Loke, Director of Corporate Finance

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Huston Loke is Director of the Ontario Securities Commission’s (OSC) Corporate Finance branch, which regulates Ontario’s reporting issuers (other than investment funds) and leads the Commission’s issuer-related policy-making activities. The Corporate Finance branch also led the exempt market initiative at the OSC. Huston recently spoke with the Investor Office about the role of his team, the exempt market, and what a series of new prospectus exemptions means for investors.

Meet Huston…

Before I joined the OSC, I consulted on risk management for a major financial institution, and before that I headed up a credit-rating agency. I’ve always been interested in work that provides a framework and foundation for investors and other stakeholders to make decisions about the companies with which they are interacting, and that interest continued when I moved to the OSC in 2012.

On the role of the Corporate Finance Branch…

Our role is to establish the regulatory framework for securities offerings in the public and exempt markets, and monitor compliance through ongoing reviews. The Corporate Finance team monitors the market, flags problematic issuers and identifies potential risks and gaps for future regulations. We look at disclosure filings as they’re submitted and coordinate with other branches across the Commission to review product offerings and monitor compliance with securities laws. Investor protection is our goal, and we want to make sure that we have an effective compliance program in place to help us achieve it.

On the exempt market…

Typically, securities sold in Ontario are done so with a prospectus, which is a detailed document that outlines relevant information about the investment and the company offering it. However, there is a section of the market, called the exempt market, where securities can be sold without a prospectus. Historically, the exempt market was only available to certain so-called “sophisticated” investors. However, recent regulatory changes allowed retail investors in Ontario to also access the market and buy certain securities without a prospectus.

Many investors want choice, and these exemptions provide them with some additional options for their portfolios. As a regulator, our role is to ensure that retail investors can access the kinds of investments they’re looking for while ensuring that they have a certain level of protection. We do this through a robust surveillance program, giving the OSC the information we need to supervise the exempt market and enact policies that provide investor protection.

That said, the vast majority of equity capital raised continues to flow from public markets, and we continue to direct the vast majority of our regulatory resources there.

Huston-Loke-Portrait

On his daily source of inspiration…

There’s a picture hanging in my office [pictured right] that was painted by my father. It was inspired by an old Chinese adage, “The mountain is high and the emperor is far away.” I think it holds a useful reminder for us as regulators. We can’t develop our policy in an “ivory tower,” and our role does not end with the development of policy. You also need ongoing supervision and compliance, and to maintain an environment which fosters capital formation. When the rules are clear and achieving what they are meant to, investors are more confident, and this helps lead to a market from which we can all benefit.

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