OSC's top enforcement official to leave at end of February

Jeff Kehoe presided over major cases against executives at Home Capital, Sino-Forest and CannTrust

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The Ontario Securities Commission‘s director of enforcement will be leaving the capital markets watchdog at the end of February after seven years in the job, according to sources who were briefed on his departure.

Jeff Kehoe, 60, helmed a number of major cases at Canada’s largest securities regulator, including securing findings of fraud against the two senior executives of real estate firm First Leaside Group of Companies. He also oversaw cases against executives of defunct timber company Sino-Forest Corp., mortgage company Home Capital Group Inc. and cannabis company CannTrust Holdings Inc., and was in the process of overseeing the ongoing case against executives of lender Bridging Finance Inc., which was put into receivership.

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The CannTrust case ended abruptly with acquittals in December 2022 when cross-examination of a key OSC witness exposed a flaw in the regulator’s case, a rare quasi-criminal prosecution that played out in the Ontario Court of Justice.

During his time at the OSC, Kehoe also oversaw no-contest settlements with some of the country’s biggest banks, which saw millions of dollars paid to clients who had been changed “excess” investment fees on funds as a result of insufficient controls or supervision.

In addition to cases pursued through the courts and the regulator’s own tribunal, Kehoe’s enforcement team produced an in-depth report in 2020 on the collapse of crypto trading platform QuadrigaCx, which it dubbed “an old-fashioned fraud wrapped in modern technology.”

The report was instrumental in the OSC’s hardline stance on crypto, which included taking a leading role in tracking and regulating the sector, including crypto exchanges.

The OSC cracked down on non-compliant crypto platforms in 2022 with market bans and monetary penalties and kept global players such as FTX — which crashed spectacularly in November of that year — from taking on many clients in Ontario. Other provincial securities regulators across Canada followed the OSC’s lead on crypto in December 2022 with an oversight regime that includes strict rules on custody and requires all trading platforms seeking registration to sign undertakings to comply with investor protections.

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Among Kehoe’s priorities during his tenure was stepping up the OSC’s expertise and tools in data analytics to deepen investigations and keep up with evolving capital markets and online harms, which he pushed to address globally through the International Organization of Securities Commissions.

He was also a key player in getting Canada’s first paid whistleblower program off the ground in 2016. By 2022, the program had paid out $9 million to whistleblowers who helped secure $48 million in monetary sanctions and voluntary payments in cases ranging from misleading disclosure to market manipulation and fraud.

OSC spokesperson JP Vecsi said there will be a search conducted for Kehoe’s successor. In the meantime, the regulator’s executive director Leslie Byberg will oversee the OSC’s enforcement branch.

“Since joining the OSC in 2016, Jeff has demonstrated a remarkable commitment to protecting Ontario’s investors and pursuing bad actors,” Vecsi said in an emailed statement, calling Kehoe “an outstanding public servant for Ontario’s capital markets.”

A lawyer with nearly two decades of regulatory enforcement experience as well as a criminal law background, Kehoe was hired in late 2016 by Maureen Jensen, who left her position as chair and chief executive in April 2020, before her mandate expired, amid increasing tension with the Ontario government.

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“He took risks on cases that mattered,” Jensen said on Jan. 22, naming Sino-Forest, mining company Katanga, and Home Capital. “Jeff took investigative risks when he saw examples of capital market failures to send a message, even when taking those risks sometimes did not pay off.”

She added that the Quadriga report was “a new way to illustrate the many problems regulators were seeing with crypto exchanges,” even though enforcement was not possible because the company’s founder and operator had died.

Kehoe subsequently worked under Jensen’s replacement, Grant Vingoe, who was both chair and CEO until he relinquished the chair title in March 2022 when a new governance structure was adopted to separate the adjudicative and regulatory policy functions of the OSC.

Joel Wiesenfeld, a veteran securities litigator who is on a roster of third-party mediators used by the OSC, described Kehoe as creative, pragmatic and forward-looking in his approach to securities enforcement.

“He was a key supporter of efforts to resolve enforcement matters through mediation, particularly when there were related civil court claims,” Wiesenfeld said, adding that mediated settlements of enforcement allegations and class actions are done “to the great benefit of investors and the capital markets.”

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Prior to joining the OSC, Kehoe led the enforcement division of the Investment Industry Regulatory Organization of Canada (IIROC) from March of 2010 until early 2013, when he left to become a partner and general counsel at Difference Capital, a merchant bank founded by former Griffiths McBurney & Partners (GMP) trader Mike Wekerle. He stayed at Difference for a little over a year.

Early in his career, Kehoe worked as a crown attorney prosecuting serious cases including murder before moving to the Department of Justice where he worked on constitutional cases.

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