Fibrek Quebec Court of Appeal Highlights Importance of Market Prices in Dissent Right Valuation Proceedings

On February 2, 2024, the Quebec Court of Appeal issued its unanimous decision reducing the fair value of the Fibrek shares by 20% and emphasizing the importance of market prices in determining fair value. Overview of the main facts discussed on appeal On November 28, 2011, Resolute announced an unsolicited take-over bid to acquire Fibrek … Continue reading

Quebec Court Enforces Penal Provisions of Securities Act in connection with “Initial Coin Offering” of “PlexCoin”

Last month, the Court of Quebec (Criminal and Penal Division) rendered its decision on the culpability of three defendants involved in the initial coin offering of the cryptocurrency known as “PlexCoin”. Dominic Lacroix (Lacroix), the head of the PlexCoin project, Sabrina Paradis-Royer (Paradis-Royer), Lacroix’s spouse and employee, and Yan Ouellet (Ouellet), head of IT for … Continue reading

Supreme Court of Canada recognizes cross-border challenges of modern securities regulation: the “Real and Substantial Connection” test applied in Sharp v. Autorité des marchés financiers, 2023 SCC 29

In Sharp v. Autorité des marchés financiers, 2023 SCC 29, the Supreme Court of Canada recognized the transnational nature of modern securities regulation in holding there was a “real and substantial connection” between alleged perpetrators of a “pump-and-dump” scheme and Québec. This connection allowed the province’s Financial Markets Administrative Tribunal (FMAT) to assume jurisdiction over … Continue reading

Sauce for the Goose, Sauce for the Gander:  Denial of Staff’s Adjournment Request in Valentine (Re), 2023 ONCMT 33

In reasons released October 5, 2023, the Capital Markets Tribunal summarily dismissed a motion by OSC Staff to adjourn a 15 day hearing on the merits approximately three weeks before it was scheduled to commence. The adjournment was requested due to the departure of the OSC senior litigation counsel who had had carriage of the … Continue reading

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