You are a third-party witness to a potential breach of U.S. securities laws, living in Québec, if you think that you are out of reach of the SEC, think again.  In United States Securities and Exchange Commission v. Ouellet, 2018 QCCS 4239, the Québec Superior Court did just that and granted an order compelling a resident living in Québec to produce documents and produce themselves for questioning in relation to an investigation in the U.S.


As discussed in our previous post, the founders of PlexCoin token issuer PlexCorps are under investigation by securities regulators on both sides of the Canada – U.S. border.  In a U.S. complaint, the Securities and Exchange Commission (SEC) alleges that PlexCorps and its founders made materially false statements in connection with the Initial Coin Offering (ICO) of PlexCorps and defrauded investors.

Yan Ouellet was an employee of one of PlexCorps’ founders at the time of the ICO. Despite not being under investigation himself, the SEC took an interest in him as a third-party witness able to provide evidence (testimony and documents) relevant to the SEC complaint.

Why is the SEC interested in Ouellet?

According to the SEC, Ouellet:

  • assisted the PlexCorps founders with its websites
  • helped set up accounts with payment service providers to collect funds from investors
  • knew whether statements made in connection with the ICO were true or false
  • knew of PlexCorps’ efforts, if any, to avoid offering PlexCoins to U.S. investors.

SEC first asks U.S. Court to request international judicial assistance from Québec Court

To gain access to Ouellet, the SEC began by asking the U.S. District Court for the Eastern District of New York to issue an order and request for international judicial assistance to the Québec Superior Court, also better known as letter rogatory. The letter rogatory requested that the Québec Superior Court compel Ouellet to turn over documents relating to the PlexCorps ICO to the SEC and submit himself for questioning by counsel to the SEC and PlexCorps in Québec.  Despite opposition from PlexCorps and its founders, the SEC was successful and obtained the letter rogatory from the U.S. District Court.

SEC then turns to Québec Court with U.S. Court request for judicial assistance

Armed with the letter rogatory, the SEC appeared before the Québec Superior Court and argued that Ouellet is a third-party witness with evidence that is relevant to the U.S. complaint, necessary for use at the trial in the U.S., a material witness for the U.S. court to do justice and that the evidence and oral testimony sought from Ouellet could not be obtained from any other source.

Ouellet’s unsuccessful contestation

Ouellet contested the SEC’s demands by arguing, among other things, that:

  • the SEC’s letter rogatory was a fishing expedition (their extremely broad list of 20 topics could cover many thousands of documents); and
  • he would invoke section 50 of the Canada Evidence Act and refuse to answer questions that would incriminate himself.

The Superior Court noted that out of mutual deference and respect, courts will enforce a foreign request if, among other things, the evidence sought is relevant, necessary for trial and will be used at trial, not otherwise obtainable and that the order sought is not against public policy.

The Court found that the SEC application met all of these criteria.

The Court also dismissed Ouellet’s argument that he could refuse to answer self-incriminating questions because:

  • Section 50 of the Canada Evidence Act does not apply because Ouellet was being compelled to testify under a letter rogatory as opposed to under Part II of the Canada Evidence Act, which contains section 50.
  • As was established in the Ontario Court of Appeal case of Treat America Limited v. Leonidas, 2012 ONCA 748, a person ordered to give evidence pursuant to a letter rogatory does not have the ability to refuse to answer questions neither under the Fifth Amendment of the U.S Constitution nor under Canadian law.
  • The only available protection to that person is that an answer given to a question objected to as potentially self-incriminating will not be used in any criminal proceeding against him, other than a prosecution for perjury.

The Québec Superior Court granted the SEC motion and ordered Ouellet to turn over the broad universe of documents covered by the letter rogatory and to submit himself to questioning by counsel to the SEC and PlexCorps’.  At the end of the day, the fact that Ouellet lives in Québec did not put him out of the SEC’s reach.