Ontario’s Capital Markets Tribunal finds it does not have jurisdiction to “supervise” OSC investigation orders

In Binance Holdings Limited (Re), 2023 ONCMT 27, Ontario’s new Capital Markets Tribunal (the Tribunal) clarified that it does not have the jurisdiction to revoke an investigation order made by the Ontario Securities Commission (OSC). Background In May 2023, the OSC issued an investigation order under s. 11 of the Ontario Securities Act[1](the Act) to … Continue reading

What’s the Difference?  Ontario Divisional Court finds trading in Contracts for Difference amounts to trading in unregistered securities: VRK Forex & Investments Inc. v Ontario Securities Commission, 2023 ONSC 3895

Ontario’s Divisional Court has upheld a decision of the new Capital Markets Tribunal, finding an over-the-counter financial instrument to meet the definition of “investment contract” pursuant to the Securities Act. Background The appellants conducted business trading in Contracts for Difference (CFDs), a financial instrument offered through online trading platforms “over the counter” rather than on … Continue reading

US SEC targets Coinbase, signaling stricter enforcement against crypto exchanges

On March 22, 2023, the Securities and Exchange Commission (Commission or SEC) issued a Wells Notice to Coinbase, Inc., the largest US-based cryptocurrency exchange and a NASDAQ-listed company. A Wells Notice is a communication from the SEC enforcement staff (Staff) to a person or entity involved in an investigation informing them that the Staff has … Continue reading

Primer on Prospectus Exemptions

Introduction In accordance with the Québec Securities Act[1], any person wishing to distribute securities must prepare a prospectus[2]. However, Regulation 45-106[3] offers several exemptions from prospectus requirements. In addition to these exemptions, the Autorité des marchés financiers may also grant discretionary exemptions, as long as it is deemed not to affect the protection of investors.[4] … Continue reading

Mutual Fund Managers’ Liability for “Time Zone Arbitrage”: Fischer v. IG Investment, 2023 ONSC 915

At the conclusion of a liability trial before the Ontario Superior Court of Justice in this class action commenced 17 years ago[1], two Canadian mutual fund managers were found negligent for having failed to prevent certain hedge funds from engaging in “time zone arbitrage”, a type of trading strategy employed by short term traders characterized … Continue reading

Increasing Enforcement: OSC and SEC Take Aim at Cryptocurrency Platforms

On December 12, 2022, the Ontario Securities Commission (OSC) issued a news release further cautioning crypto trading platforms operating in Canada on the applicability of securities laws to their operations. This news release comes amidst the OSC’s increasing oversight of cryptocurrency offerings. When does securities legislation apply? Previously, in January 2020, the Canadian Securities Administrators … Continue reading

Solicitor Client Privilege Claims over Seized Documents D.L. v. Autorité des marchés financiers, 2022 QCCS 2157

In D.L. v. Autorité des marchés financiers (AMF), the Superior Court of Quebec ruled on solicitor client privilege claims made by D.L. to resist disclosure of documents seized by the AMF at D.L.’s home in the context of an ongoing pump and dump investigation. The Court recalled the following principles: The burden of establishing solicitor … Continue reading

Fraudulent Transaction Offence at s. 199.1 Quebec Securities Act : a Mens Rea Offence Autorité des marchés financiers c. Goyette 2022 QCCQ 2872

In late May 2022, the Court of Quebec Criminal and Penal Division issued its decision in AMF v. Goyette. It is significant because it is the very first decision deciding that the market manipulation offence set out at section 199.1 of the Quebec Securities Act (QSA) is a full mens rea offence, requiring the prosecuting regulator, … Continue reading

What constitutes or not MNPI? Kitmitto (Re), 2022 ONCMT 12

In late May 2022, in one of the first decisions of the new Ontario Capital Markets Tribunal, the Tribunal issued its decision in Kitmitto (Re), an insider tipping and trading case.  In Kitmitto, Ontario Securities Commission (OSC) Staff alleged the existence of a tipping chain in which multiple individuals acquired material non public information (MNPI) … Continue reading