Veteran banking executive appointed OSC head, to increase hedge fund supervision

Date: Thursday, June 23, 2005
Author: JACQUIE MCNISH- theglobeandmail.com

The Ontario government has reached outside the legal fraternity to name David Wilson, a wealthy investment banking executive at Bank of Nova Scotia, as the country's top securities gun.

Mr. Wilson, who was appointed chairman of the Ontario Securities Commission, has 35 years of experience with Scotiabank and former Toronto brokerage McLeod Young Weir Ltd., which the bank acquired in the 1980s. After shrewd investments in the bank's stock, the 60-year-old Scotiabank vice-chairman has amassed a personal fortune of more than $30-million, easily making him the richest OSC chairman in history.

It has been widely expected that Mr. Wilson would leave the bank after he was passed over in 2003 for the chief executive officer's position at the bank. The job went instead to Richard Waugh.

His appointment marks the first time in decades that Ontario has not hired a corporate or securities lawyer for the job. By appointing a Bay Street executive, Ontario is following the Securities and Exchange Commission model in the United States, where senior Wall Street officials are regularly parachuted in to oversee the regulator.

Sources close to the Ontario government said a number of institutional investors and corporate executives had been lobbying the province to hire an industry executive who had enough inside knowledge of the securities business to help the OSC better police against improper activities.

Associates of Mr. Wilson describe him as a principled and hard-driving executive who has been appalled by the outbreak of insider trading and corporate scandals in North America in recent years.

In a brief interview yesterday, Mr. Wilson made it clear that bolstering the OSC's enforcement record is a priority.

"The financial services business that I've lived in for such a long time [is populated] by a vast majority of honest and straightforward people who are trying to make a living. But there is always going to be a small segment of people in the financial services business with all this money washing around who are going to try and take advantage of other people or of the system for their own advantage," he said.

"These people should be found out and prosecuted and should not get off the hook."

Mr. Wilson said he will also seek to improve protections for retail investors, step up supervision of rapidly growing hedge funds and bring to life the long-frustrated goal of a national securities regulator.

The Scotiabank executive is replacing David Brown, a former corporate lawyer with Davies Ward Phillips & Vineberg, who has headed the OSC for seven years. Mr. Brown is credited with rebuilding a regulator that had been demoralized by defections and funding cuts for years. Mr. Brown succeeded in tripling the OSC's enforcement staff to more than 90 people and he oversaw the successful prosecution of improper pension and mutual fund trading practices. Despite these gains, the commission has come under criticism for the bumpy progress of prosecuting such infamous cases as the Bre-X gold mining collapse.

Mr. Brown retires next week. Susan Wolburgh Jenah, the OSC's vice-chairman, will temporarily replace Mr. Brown until Mr. Wilson arrives in November.

Mr. Wilson said he is delaying his departure to help the bank groom his successor. Before he moves to the OSC, Mr. Wilson may need to cut one other corporate tie. A long-time adviser to cable mogul Ted Rogers, Mr. Wilson currently serves as a director of Rogers Communications Inc.

Mr. Wilson said Mr. Rogers has asked him to remain on the company's board. Legal experts said Mr. Wilson will likely have to step down from the public company's board before he joins the OSC to avoid any potential conflicts.

The appointment of Mr. Wilson ends one of the most interesting horse races on Bay Street in years.

Other top contenders for the regulatory posit were David Drinkwater, a former senior executive with Ontario Power Generation and long-time corporate lawyer with Osler Hoskin & Harcourt LLP, and Gary Girvan, a widely respected mergers and acquisitions specialist with McCarthy Tétrault LLP.