In a decision issued on July 24, 2018, the Ontario Securities Commission held that the test to determine whether a respondent’s case should be severed and heard separately is the same test used in criminal proceedings.

The decision, Hutchinson (Re), 2018 ONSEC 40, is available here.

Allegations of insider trading and insider tipping

The OSC commenced proceedings against four individuals alleging insider trading and insider tipping with respect to the securities of eight companies.

Commission staff alleged that Donna Hutchinson, a legal assistant at a law firm, provided material non-public information to her friend Cameron Edward Cornish regarding M&A transactions being handled by her law firm. While the information was to remain confidential, Cornish was alleged to have shared it with Patrick Jelf Caruso and David Paul George Sidders. Before the information was generally disclosed, Cornish, Caruso, and Sidders acquired positions in the companies that improved after the information became public.

Hutchinson agreed to a settlement. She acknowledged that she provided material information, not generally disclosed, to Cornish about M&A transactions being handled by the law firm where she was employed.

The motion for severance

Sidders brought a motion to the Commission for an order severing his hearing from the hearing of Cornish and Caruso on the basis that most of the allegations either did not involve him or turned on different questions of fact than those at the heart of the allegations against Cornish and Caruso. Sidders also argued that his case would be unfairly tainted by any findings made against Cornish and Caruso, and he should not be exposed to the additional expense and delay associated with a joint hearing.

The Commission applies the criminal law test for severance

The Commission adopted the test for severance articulated by the Supreme Court of Canada in R v. Last, 2009 SCC 45, for criminal proceedings.

In Last, the Supreme Court identified a non-exhaustive list factors to be weighed when considering an application under section 591(3) of Canada’s Criminal Code to sever a multi-count criminal indictment: (1) general prejudice to the accused; (2) the legal and factual nexus between the counts; (3) the complexity of the evidence; (4) whether the accused intends to testify on one count but not another; (5) the possibility of inconsistent verdicts; (6) the desire to avoid a multiplicity of proceedings; (7) the use of similar fact evidence at trial; (8) the length of the trial given the evidence; (9) the potential prejudice to the accused with respect to the right to be tried within a reasonable time; and (10) the existence of antagonistic defences as between co‑accused persons.

In adopting the Last approach in Hutchinson, the Commission rejected a more formulaic two-part test applied by the Alberta Securities Commission.

In the result, the Commission concluded that Sidders did not establish that severance would be appropriate and concluded that the R v. Last factors strongly favoured denying severance.


Hutchinson explicitly holds that the Supreme Court’s decision in Last governs motions for severance brought before the OSC. Nevertheless, it remains to be seen how many of the factors identified by the Supreme Court in Last and subsequently applied by criminal courts will be applied in the context of regulatory proceedings.

For example, the Hutchinson decision posits that there are “special reasons, unique to criminal accused, including certain constitutional protections”, that may explain or give heightened importance to the inclusion of the “whether the respondent intends to testify on one allegation but not another” factor, and leaves open the question of “whether this factor should figure prominently, or at all, in the regulatory context”.

Similarly, in relation to the “potential prejudice to the respondent with respect to the right to be tried within a reasonable time” factor, the Commission comments that “[i]n the regulatory context, there is no constitutional right to a trial within a reasonable time, as exists for criminal accused”, suggesting that there is no delay in OSC proceedings that would presumptively require severance.

Despite significant open questions, Hutchinson stands as the leading decision on severance in OSC proceedings, and counsel should carefully assess the Last factors when strategizing in matters before the Commission involving multiple respondents.


The author would like to thank Tyler Morrison for his assistance with this article.