Topic: Civil claims

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Managing Securities Litigation Risks in the Age of Uncertainty

The price at which securities of many Canadian issuers are trading has been significantly affected by the global coronavirus pandemic. This will almost certainly impact their risk of litigation arising from the accuracy their public disclosures. For companies that are dual listed in the United States, the risks are likely enhanced.

These risks appear to be exacerbated for issuers whose shares trade on Canadian exchanges as a result of the recent suspension of Ontario limitation periods, giving security holders a longer time within which to commence litigation.

With this in mind, issuers are well advised to continue to work closely … Continue Reading

Directors and officers face increased liability risk due to climate change

Climate change has been a focus in the United States for quite some time now, and the US Securities and Exchange Commission (SEC) published interpretive guidance on climate change disclosures a decade ago. However, the times are changing—and the potential liability for directors and officers has never been higher. Climate change disclosures have been debated at the highest levels of the SEC, and the Plaintiffs’ bar can be expected to broaden their lawsuits beyond the usual fossil fuel producer or utility targets.

Norton Rose Fulbright has prepared a legal update that discusses the evolution of the SEC’s position with respect … Continue Reading

Alberta Court of Appeal considers an investment scheme

The Alberta Court of Appeal has provided helpful analysis relating to personal liability of actors in investment schemes: personal liability of principals and claims under the Securities Act.

Facts

Charles Ryan promoted a plan to develop land through various corporate vehicles. Markus Abt invested $800,000 after speaking with an investment advisor with Sun Life. Mr. Abt believed he would receive 70% return on the investment and monthly payments of $2,600.

When the developer corporation became insolvent, the Abts sued numerous people involved in the investment. Prior to trial, the Abts settled with Sun Life for $360,000.

The trial judge … Continue Reading

Court of Appeal for Ontario expands on auditors’ duty of care

Key take-aways

On September 5 the Court of Appeal for Ontario issued its decision in Lavender v. Miller Bernstein LLP, 2018 ONCA 729.

  • The decision is now the leading judgment by Ontario’s highest court on the duty of care owed by auditors.
  • The Court of Appeal held that an auditor does not owe a duty of care to account holders with a securities dealer simply by virtue of auditing the dealer’s annual registration renewal requirements filed with a securities regulator.
  • The decision confirms that the legal determination of the class of persons to whom an auditor owes a
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Quebec Superior Court dismisses action for damages against Autorité des marchés financiers

In Mallat c. Autorité des marchés financiers de France, 2018 QCCS 3867, Cohen J. granted a motion to dismiss an action brought by three Ubisoft executives (Plaintiffs) against the Autorité des marchés financiers de France (AMFF) and the Autorité des marchés financiers du Québec (AMFQ).

Among many demands[1], the Plaintiffs requested declarations that the Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (the MMoU) ‑ to which more than one hundred securities regulators world-wide are parties ‑ was invalid, that the subpoena sent by the … Continue Reading

The Importance of Materiality in Secondary Market Misrepresentation Claims: Paniccia v. MDC Partners Inc. Securities Class Action

In the recent decision of Paniccia v MDC Partners Inc., Perell J. refused to grant leave to proceed with a putative secondary market securities class action under Part XXIII.1 of the Ontario Securities Act (OSA) against MDC Partners Inc and certain of its officers on the basis that the alleged misrepresentations were not material.  The decision presents valuable insight into the assessment of materiality, an issuer’s obligation to disclose a regulatory investigation, and a plaintiff’s obligation to plead a corrective disclosure under Part XXIII.1.

Background to the Decision

In August 2015 the Plaintiff brought a putative … Continue Reading

Ontario Court Rejects “Family Resemblance” Test for Defining Securities under the Securities Act

On May 15, 2018, the Ontario Superior Court of Justice in Ontario Securities Commission v. Tiffin confirmed that the “family resemblance” test cannot be used to answer one of the central questions of securities law: what constitutes a security?

Background

In July 2014, the Ontario Securities Commission (OSC) prohibited Mr. Tiffin from trading in securities or relying upon any exemption under Ontario securities law. Mr. Tiffin subsequently issued fourteen promissory notes on behalf of his company, Tiffin Financial Corporation (TFC), to six clients.  As a result, Mr. Tiffin and TFC were charged with breaches of s.122(1)(c) … Continue Reading

Not All’s Fair in Disgorgement and Fraud

On April 18, 2018, the Ontario Superior Court of Justice released its reasons in Ontario Securities Commission v. Bluestream Capital Corporation which is a useful illustration of the Ontario Securities Commission (OSC)’s power to garnish funds held by victims of investment fraud that are payable as debts to the perpetrator of the fraud.

The Background

Peter Balazs solicited a number of people to invest in his companies.  However, neither Mr. Balazs nor any of the companies were registered with the OSC, as required by the Ontario Securities Act, and the majority of the “invested” funds were used … Continue Reading

Deferred Prosecution Agreements: Coming to Canada Shortly

The Canadian government, as part of Bill C-74-1 the Budget Implementation Act introduced on March 27, 2018, finally introduced a bill that would make deferred prosecution agreements (DPAs) part of the Criminal Code. This new prosecutorial tool would represent a significant shift in Canada’s approach towards corporate wrongdoing – one that aligns Canada more closely with global trends. The introduction swiftly follows the consultation process which wrapped up in December. DPAs will be available for certain, not-yet-disclosed, offences.

As in other jurisdictions which have recently recommended DPAs, such as in Singapore and Australia, Canada’s remediation agreement framework is … Continue Reading

Investment advisors’ legal duties fall under the spotlight

In a decision released July 6, 2017- Shinoff v BMO Nesbitt Burns Inc et al.Justice France Dulude of the Québec Superior Court provided helpful guidance on the duties owed by investment advisors to their clients.  The plaintiff claimed that the defendants had failed to provide investment advice that was appropriate for his financial objectives.  He claimed that the defendant’s negligent decision to make significant investments in preferred shares led to a loss of $5.3 million, for which he sought damages pursuant to Article 1463 of the Civil Code of Québec.

The plaintiff was unsuccessful at trial. According … Continue Reading

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