Capital inflow – securities regulators sleeping at the wheel?

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By Ted Liu

Notwithstanding strict foreign exchange control imposed by The People’s Bank of China (PBOC), we continue to see “wealthy” Chinese investors, not mentioning those investing from Hong Kong or from offshores BVI or Cayman Islands, investing large sum in Canadian securities, mortgage investment corporations (MICs) and other forms of securities.

Notwithstanding continuing economic sanction, we continue to see Iranian investors with big cheque book investing in Canadian MICs.

Notwithstanding hyperinflation and prevalent economic hardship, we continue to see money from Venezuelan investors finding its way into Canadian companies.

Notwithstanding continuing economic sanction, a Toronto based $1.2 billion real estate private equity fund recently raised $260 million from one investor from Democratic People’s Republic of Korea (law firm’s filling error?).

Who are those investors? What kind of money is flowing into Canada? Shall the securities regulators at least be aware of the money trail?

Provincial securities regulators have always been very proud of themselves for putting protecting their own provincial investors at the very top of their agenda.

It seems that whatever money, good or suspicious, that their own issuers raised from investors out of their own jurisdictions are none of their business.

(This is also true for other forms of private capital, specifically, venture capital – do our federal and provincial governments have any clue of how much foreign money invested in VC backed companies? Or do they even care? How can they claim for evidence-based policy making?)

Form 45-106F1 Report of Exempt Distribution provides wealth information that the securities regulators would need in tracking money flow. The question is that do the regulators have capability to track, to monitor, and to act.

Canada has a dubious reputation for money laundering. Securities regulators must change their mindset, track and monitor and do serious “regulation.”


CPE Analytics, through Canada’s only comprehensive all financings database (Canadian Financings), tracks capital in-flow into Canadian companies and out-flow into foreign firms and funds.

Image by mohamed Hassan from Pixabay