Honourable senators, I rise today to speak to Bill S-250, An Act to amend the Criminal Code regarding the interception of private communications, introduced by our colleague Senator Wetston last spring.

This bill is quite simple: a single, short clause that proposes to amend section 183 of the Criminal Code to add to a list of 137 offences a new offence, namely insider trading. Since this is a very short and simple bill, I will be brief — perhaps even more brief than some questions could be.

Insider trading is committed when a person uses privileged information to trade on the stock exchange to their own advantage before other shareholders and members of the public have knowledge of the information in question. The person can therefore sell or buy based on information that puts them at an advantage, distorting markets and securities rules. This activity is not only illegal and unfair, but it also compromises the integrity of stock market transactions and undermines investor confidence in the market. In truth, it would be only natural to add insider trading to a list that includes fraud, misrepresentation of information, breach of trust, and fraudulent manipulation of stock exchange transactions.

In his speech at second reading, Senator Wetston explained that, in Canada, “enforcement of insider trading comprises a variety of approaches from administrative to criminal.” However, only a criminal conviction would result in a prison sentence of up to 10 years and a criminal record, an appropriate sanction in the most serious cases.

As Senators Wetston and Boniface said, if this bill is passed, it will provide the police with an additional tool, and more importantly an effective one, for investigating the most serious insider trading offences. Those who engage in this behaviour deserve to have criminal charges brought against them, deserve to be brought to trial and, if they are found guilty, deserve to be given a long jail sentence and to have a criminal record. That is what section 382.1 of the Criminal Code provides for.

However, we also need to remember that, in order to obtain a criminal conviction, the Crown must prove that the accused intended to engage in insider trading. In law, we refer to that as mens rea.

In his speech at second reading, Senator Wetston talked about how difficult it is to obtain a criminal conviction, since it is complicated to try to prove that the accused intended to engage in such activities given that the evidence is often based on deduction and inference.

In reality, as it was written in the New York Times on September 30, 2010:

This is the type of case that would be nearly impossible to prove without evidence like that obtained through the wiretaps because the trading was not based on a single corporate event that could be traced back to a source.

To the same effect, one could read in The Globe and Mail, on March 27, 2014, the following:

Insider trading cases are notoriously difficult to prosecute as criminal offences because they require proof that individuals made trades based on undisclosed material information they discovered about a company. People accused of the crime typically argue they traded for other reasons — such as their own investment research — and not because of insider information.

Honourable colleagues, the time has come to give the investigator of insider trading a reliable tool to prove the criminal intent to take advantage of tips or insider information, and to ensure that this unethical and disturbing practice of the markets is stopped by deterring those who might otherwise be tempted to commit an illegal act knowing how difficult it is to prove.

It is easy to provide this tool. Just add a few words — two words — in a long list of potential offences, including some that present some similarities with insider trading.

This entails no substantive modification to the Criminal Code. To be clear, the procedure to follow in obtaining a judicial authorization would not be modified in any way. I refer you to the speech of Senator Boniface, given on October 23, where she explained the various requirements presented in the Criminal Code to ensure there are no abuses in the use of wiretapping.

The amendment will also follow a 2014 recommendation unanimously made by the Uniform Law Conference of Canada, an organization that, amongst other things, endeavours to identify deficiencies in federal criminal legislation and makes recommendations for change where appropriate.

The amendment will place Canadian practices on equal footing with practices prevailing in the United States, where, and I quote here from Neil Gross, the former executive director of the Canadian Foundation for the Advancement of Investor Rights: “wiretaps have been instrumental in successfully prosecuting insider trading.” As Gross concludes, wiretaps are “likely to be equally useful here.”

Indeed, when the U.S. legislation authorizing wiretaps was adopted in 1968 — that’s a long time ago compared to Canada — the use of wiretaps during investigations was restricted to a list of enumerated offences, which entirely omitted white collar crimes and focused primarily on offences pertaining to organized crime and narcotics. Over the years, the legislation was amended to include numerous white-collar crimes, including insider trading.

When it comes to insider trading, I believe a similar amendment is now badly needed in the Criminal Code of Canada. I remind you, honourable colleagues, it will not be a significant change to a list already long, including numerous older types of white collar offences. It will also offer an opportunity to correct the deficiency in the Criminal Code and to provide to law enforcement agencies an effective tool to regulate and maintain the integrity of our security markets.

I thank you, Senator Wetston, for bringing this matter forward. You are an experienced man in that field. Thanks to your knowledge, you raised the awareness of this place about something that needed to be corrected in the Criminal Code.

I thank you all for your attention at this late hour on the last day of this week. Thank you.