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This current OSC system also provides a road map to class action plaintiff lawyers such as Mr. Lascaris, who don’t need to “reinvent the wheel” to make a case in what is almost always a separate pursuit of financial compensation for victims of financial malfeasance.

Mr. Lascaris’s opponents, lawyers who often defend firms and individuals who find themselves in the cross hairs of the regulator, argue equally persuasively that the “free-ride” of class action lawsuits must come to an end because it is harming the capital markets by bogging down enforcement.

“It deters people from settling with the OSC,” says Kent Thomson, a partner at Davies Ward Phillips & Vineberg LLP. What’s more, defence lawyers argue, no-contest settlements would free up limited regulatory resources for a higher volume of enforcement and more complex cases.

The growing debate over no-contest settlements is shaping up to be rougher than many contested hearings, based on interviews and submissions filed with the OSC ahead of a Dec. 20 deadline for comment.

A roster of lawyers from some of Bay Street’s top firms, including Torys LLP, McCarthy Tétrault LLP, Borden Ladner Gervais LLP and Heenan Blaikie LLP, have banded together to voice their support for no-contest settlements, which they would like to see adopted by national self-regulatory agencies as well as the OSC.

“Who are class actions good for? I think they frequently benefit the plaintiff’s counsel who become co-owners of the lawsuit,” says Jonathan Levin, a veteran securities lawyer at Fasken Martineau DuMoulin LLP. The class action lawyers have a “de facto” piece of the action, because they “become entitled to a percentage of whatever is paid for damages or in settlement,” Mr. Levin notes.