TANNIS TOOHEY/TORONTO STAR

Ontario Securities Commission chief David Wilson.

"What keeps you awake at night?"

"I sleep pretty well."

In a small, antiseptic meeting room at the Ontario Securities Commission, David Wilson quickly stops himself. He fears, one supposes, that his response to an interviewer's question, amidst a discussion about enforcement in the capital markets, may seem glib.

"I don't want to answer the question that way," the commission's chief executive officer says swiftly. "I guess a huge financial fraud of an Enron-type magnitude would be a very unfortunate reflection on the markets and on the regulatory structure."

This meeting with the province's top securities regulator has not been easy to arrange. A public servant, earning a salary last year of $524,000, David Wilson appears to be as closely guarded and strictly managed as a head of state. Two years into the job, he has given few interviews and, according to one of his public relations representatives, has an aversion to being profiled and would rather leave his reflective thoughts on where the commission has been and where it's headed to prepared speeches.

It is unclear whether Wilson is naturally media averse. Or whether he has defensively assumed that posture as the commission has come under fire for being lax and inadequate, charges that Wilson does not accept. Or whether his handlers are to blame.

What is clear is that Wilson has not adopted the higher profile of his American counterpart. The top job at the U.S. Securities and Exchange Commission, currently occupied by Christopher Cox, has frequently been a headline generator.

Wilson, on the other hand, remains well known largely within the arena that created him. Some who have worked with him through his long career on Bay Street attest to his financial wizardry, his cool mind, his sense of humour.

He spent 34 years in investment banking, growing his career at McLeod Young Weir Ltd. when Austin Taylor was its fabled leader. Wilson was a deal guy. It is in recognition of his years on the street that he has hung a work by Gerald Vaandering on his office wall, featuring three guys out on a deal, "Poised to prosper," as the piece proclaims.

"My wife saw that and said, `You have to buy that ...That's you. That's what you do,'" says Wilson.

Or what he used to do.

"When we were mounting a major campaign over something. Or when we needed money, or we needed street advice, David was the one we would go to," says Phil Lind, vice-chair at Rogers Communications Inc. Wilson was on the board of Rogers from the time it was originally constituted, in 1979, and was essential to that company's ceaseless need to raise money. Wilson also was a direct adviser to the company during its takeover of Maclean Hunter Ltd. Lind says he's a "helluva nice guy" and naturally predisposed to public service.

On the road in Winnipeg, Brent Belzberg recounts the near-impossible restructuring of First City Trust, the debt-encrusted company he had inherited from his uncle, Sam. "Everyone else at the time said, `This is a mess and we don't want to put our hands on it,'" says Belzberg. "(Wilson) stood up without even hesitating and stood by my side the whole time ... He helped us through the restructuring of the junk bond debt. He helped us through the restructuring of hundreds of millions of dollars of Swiss debt," which extended to the sweet-talking of bond holders in dozens of cantons in the Swiss countryside.

After his last big initial public offering – for Canadian National Railway Co. in 1995 – Wilson migrated to the management side of what had become Scotiabank, rising to vice-chair.

When Rick Waugh was ultimately tapped to take over the CEO's job upon the retirement of Peter Godsoe, the unanointed Wilson stepped out of Scotia and into the regulator's seat.

For this interview he arrives with highlighted talking points.

And a securities commission annual report, an aid to which he refers more than once.

His conversational presentation is cautious and contained as he directs the questioner to such reporting improvements under his leadership as the disclosure of enforcement timelines. "These are enforcement statistics that haven't been disclosed before," Wilson says. "Level of activity. Types of sanctions imposed ... You can see my background in the finance business being reflected in how we show what we've done in the year just ended."

Will this measured reliance on metrics resonate with investors?

In the fall of 2006, the honourable Peter Cory and law professor Marilyn Pilkington submitted their research study, "Critical Issues in Enforcement," to the Task Force to Modernize Securities Legislation in Canada.

"There are a number of issues in enforcement that have generated serious concern," the authors said in summary. "They include the lack of effective enforcement in high-profile securities cases in Canada" and "negative comparisons with the ability of U.S. authorities to bring timely and effective prosecutions."

The commission's epic failure in the case of John Felderhof, who was found not guilty last summer of insider trading in Bre-X shares, subsequently reinforced the fact that successful high-profile prosecutions have eluded the regulator.

What effect does Wilson feel the Felderhof decision had on investor confidence?

"I don't know," he responds. "Investor confidence in what? In the Canadian capital markets? How do you measure that?"

John Coffee, a law professor at Columbia University in New York and a member of the aforementioned securities task force, addresses the so-called "Canadian discount," a reference to having to sell more securities in Canadian markets to raise the same amount of money as an issuer would, say, in the United States. "Part of the explanation for the Canadian discount can be placed on weak enforcement, part of it can be placed on poor corporate governance in the sense of dual- class capitalization and part of it can be placed on regulatory fragmentation," says Coffee.

"If there is a discount you're dealing with something that has a chilling macroeconomic effect on the Canadian economy," continues Coffee. "I think that's the point where regulators should start."

Does Wilson believe the Canadian discount is for real? "The Bank of Canada has done studies on the cost of capital in Canadian equities," Wilson replies, referring to research that supports the existence of a risk premium. "I can't comment on those studies. We haven't done them here."

It was Coffee who commissioned Harvard Law professor Howell Jackson to comparatively analyze financial resources directed toward securities regulation in Canada and the U.S. "Howell's study does find that there is a substantial amount of money spent on the regulatory inputs," Coffee says of the budgets directed toward Canadian enforcement. "But if you look at the study there's nothing in terms of the outputs."

The lack of criminal enforcement of insider trading is a case in point. "I suspect that invites some people who are a little bit predatory to say, `No risks and enormous gains here,'" says Coffee, who goes on to lament the collapsed case against Felderhof. "I think the rest of the world sees Bre-X as probably the most flamboyant market manipulation of our time."

One might expect the head of the OSC to list illegal insider trading as a scourge upon which he has set his sights. Does he feel there is a problem with insider trading in this country?

"We investigate all kinds of insider trading cases," replies Wilson. "Suspicious trades are easier to identify; they're harder to prove."

"I understand that. Do you think we have a problem with insider trading in this country?"

"I don't have an opinion if we have a problem."

Wilson offers a big-picture comment. "I've concluded in the last two years there is no two, three or four things that can be done in Canada to make the enforcement effectiveness of securities market fraud better tomorrow," he says, snapping his fingers as he utters the word "tomorrow."

It is true, as he says, that this country's regulatory framework is fragmented – the lack of a national securities regulator being key – and peopled with a multiplicity of players. It is unfair to compare equally Canadian securities regulators with U.S. law-enforcement activities. And it is true that the commission's roles and responsibilities are as much about overseeing compliance as they are about enforcing the laws and those who break them.

But it is from enforcement, or lack thereof, that investors draw their conclusions about the effectiveness of securities regulation. As Columbia's John Coffee says, in the absence of successful prosecutions, laws are fairly meaningless.

Last month, the national Securities Fraud Enforcement Working Group, of which Wilson is co-chair, presented its working group paper to the federal, provincial and territorial justice ministers. "What we say ... to the ministers is, the system is working," said Wilson in advance of the report's submission. "Can it be better? Yes. Should we try to make it better? Yes. That's the reality as we see it."

In Wilson's view, the changes required are incremental, or "granular." In the allotted interview time, there is no evidence that David Wilson was driven into this job by any particular passion. If there's anything that fires him, it's not on display. He golfs at Rosedale. Summers at Big Bay Point. He says an explosive fraud is the one thing that would cause him to lie awake at night.

Would he put Bre-X in that category? "Oh yeah," he replies. "Four or five billion to zero? That's big."