Topic: Other developments

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EMC Prevails in Climate Change Securities Fraud Action

We recently wrote about a Complaint (the Complaint) brought by the State of New York against ExxonMobil Corporation relating to alleged climate change disclosure securities fraud. In December 2019, the Supreme Court of the State of New York dismissed the State of New York’s allegations (People of the State of New York v. Exxon Mobil … Continue reading

US federal court holds unsponsored ADRs may be subject to US securities laws

On January 28, 2020, in a case that potentially expands the liability of foreign companies, the US District Court for the Central District of California denied a foreign defendant’s motion to dismiss securities law claims brought by US purchasers of its unsponsored, unlisted American Depository Receipts (ADRs). Specifically, in Stoyas v. Toshiba Corp., — F. … Continue reading

An investigator’s misconduct can lead to a stay of proceedings

In the last 5 years, investigators with the Quebec securities regulator, the Autorité des marchés financiers (AMF), have more and more often turned to authorizing judges to secure search warrants allowing them to enter people’s homes and collect evidence. The hearings before the authorizing judges are held ex parte and authorization is granted on the … Continue reading

Alberta Court Finds that Administrative Penalty Survives Bankruptcy

In January 2020, Madam Justice B.E. Romaine of the Court of Queen’s Bench of Alberta (Court) ruled that an administrative penalty levied against the Respondent by the Alberta Securities Commission (ASC) survived his discharge from bankruptcy. (See Alberta Securities Commission v Hennig, 2020 ABQB 48) The administrative penalty was levied in 2008 against the Respondent after … Continue reading

Insider trading prosecutions may increase after Second Circuit decision lowered barriers to convict

The Second Circuit recently determined that the criminal securities fraud provisions that were enacted as part of the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley) have less onerous requirements for proving insider trading than under the general antifraud provisions of the Securities Exchange Act of 1934 (Exchange Act), specifically Section 10(b) of the Exchange Act. Section 10(b) … Continue reading

Blockchain law: Laying down the law for digital assets

Federal legislators, regulators and enforcers have been making enforcement pronouncements and new proposals to try to keep up with the social, economic, political and legal issues posed by the issuance, use and trading of digital assets built on blockchain technologies. In this edition of his Blockchain Law column, Robert A. Schwinger describes some of the … Continue reading

Proposed Changes to the Ontario Class Proceedings Act, 1992 Would Benefit Defendants and Their Insurers in Securities Class Actions

The Ontario government’s recent announcement of proposed changes to Ontario’s class proceedings legislation bodes well for defendants and their insurers. If the amendments become law, they would provide greater latitude to defendants seeking to narrow or dismiss claims prior to certification, make certification a somewhat steeper hill for class counsel to climb, and provide mechanisms … Continue reading

The Scope of “Will Say” Statements: In the Matter of BDO Canada LLP

In BDO Canada LLP (Re), 2020 ONSEC 2, a panel (the Panel) of the Ontario Securities Commission (OSC) considered a motion brought by Staff alleging that BDO Canada LLP (BDO) failed to meet the standard imposed by the Ontario Securities Commission Rules of Procedure and Forms (Rules) in the preparation of its witness summaries. The motion … Continue reading

Ding-Dong Dunsmuir is Dead: What Minister of Citizenship and Immigration v. Vavilov Means for the Ontario Securities Commission

The decision of the Supreme Court of Canada in Canada (Minister of Citizenship and Immigration) v. Vavilov (2019 SCC 65) and its companion decision in Bell Canada v. Canada (Attorney General) (2019 SCC 66), both released on December 19, 2019, breathe new life into the statutory right of appeal contained in section 9 of the … Continue reading

Disclosure of evidence by the Crown in electronic format needs to be organized and accessible

In a judgment released on December 10, 2019, the Court of Quebec, Criminal and Penal Division, in R. v. Morris, 2019 QCCQ 7635, confirmed that when the Crown chooses to disclose its evidence in a criminal or regulatory proceeding in an electronic format, it has a duty to organize the evidence and format it in a way … Continue reading

IIROC’s New Reporting Requirements for Cybersecurity Incidents

New Reporting Requirements On November 14, 2019, the Investment Industry Regulatory Organization of Canada (IIROC) amended its Dealer Member Rules (the Rules) to address reporting of cybersecurity incidents. The amendment, which takes effect immediately, requires all investment dealers regulated by IIROC to report all cybersecurity incidents. The Rules define a “cybersecurity incident” as “any act … Continue reading

Trust and transparency: New guidance from CSA regarding enhanced disclosure of conflicts of interest in cannabis M&A

Trust and transparency have been challenging in the cannabis industry: whether related to product trust and transparency or to public disclosure of conflicts of interest and the need for trust and transparency has not gone unnoticed by securities regulators. In reviewing disclosure relating to M&A and other significant corporate transactions by cannabis issuers, the Canadian … Continue reading

Dismissal of damages claim based on AMF press release announcing filing of market manipulation charges

In June 2013, the AMF laid two penal charges against Mr. Forget, the president and CEO of Clemex Technologies, a public company, alleging that he would have manipulated its stock close to five years earlier in 2008. A few weeks later, the AMF published a press release announcing the filing of the charges and specifying … Continue reading

Stung By Deceit: Re Natural Bee Works Apiaries Inc.

On July 3, 2019 the Ontario Securities Commission (“OSC”) released its decision in Re Natural Bee Works Apiaries Inc., 2019 ONSEC 23 (“Natural Bee”).   Natural Bee provides useful guidance concerning proof of falsity and participation in a fraudulent scheme under section 126.1(1) of the Ontario Securities Act (the “Act”). Background In Natural Bee, OSC Staff … Continue reading

Alberta Securities Commission secures restitution for Lutheran Church congregants

Two ordained ministers are among the five named individual Respondents who have settled with the Alberta Securities Commission (the Commission) in Re Lutheran Church-Canada, the Alberta-British Columbia District, 2019 ABASC 140.  The individual Respondents were all involved in investment funds run by the Lutheran Church-Canada, Alberta-British Columbia District (the District), which became insolvent in 2015.  The individual Respondents admitted … 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. … Continue reading

Alberta Securities Commission signs Enhanced Memorandum of Understanding to strengthen cross-border enforcement cooperation

In July 2019, the Alberta Securities Commission (ASC) joined other signatories, including the Ontario Securities Commission and the United States Securities and Exchange Commission (SEC), by signing the International Organization of Securities Commissions’ (IOSCO) Enhanced Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (EMMoU). This step by the ASC reflects … Continue reading

Ontario Securities Commission v York Rio Resources Inc.: Enforcing OSC Orders as Court Judgments outside of Ontario

On May 21, 2019, in Ontario Securities Commission v York Rio Resources Inc., 2019 BCSC 776,  the British Columbia Supreme Court (BCSC) enforced Ontario Securities Commission (OSC) disgorgement orders as court judgments from another province. Background A joint investigation was conducted by the OSC and the British Columbia Securities Commission (BC Commission) into an $18.2 … Continue reading

Liability Rumblings Along the Blockchain

In his Blockchain Law column, Robert A. Schwinger writes: When parties interact in transactions conducted via blockchain technology, they may find themselves in relationships to one another that the law has not yet had the opportunity to clearly define. Courts, commentators, governmental officials, litigants and legislatures are now exploring which participants in various kinds of blockchain-based activities … Continue reading

Sino-Forest Cont’d: Cultural Practices do not Excuse Illegal Acts

In Hung et al v Ontario (Securities Commission), 2019 ONSC 3423, the Divisional Court dismissed an appeal brought by four senior officers of Sino-Forest Corporation (the Appellants) in one of Canada’s largest frauds in history.  The Appellants sought to set aside the decision on the merits of a panel of the Ontario Securities Commission (OSC) … Continue reading

The Test on a Motion to Strike Pleadings in Proceedings Before the Ontario Securities Commission

In (Re) El-Bouji, 2019 ONSEC 19, the Ontario Securities Commission (OSC) determined that the test on a motion to strike portions of an affidavit filed by Staff in response to the respondent’s motion challenging the Commission’s jurisdiction to adjudicate certain allegations in a Notice of Hearing and Statement of Allegations is essentially the same as … Continue reading

Clearing the Way: “Ice Breaker” Settlements in Class Actions

In a recent class action settlement approval hearing, Justice Belobaba of the Ontario Superior Court affirmed the value of early “ice breaker” settlements in complex class actions involving multiple defendants. In such a settlement, one defendant settles ahead of the rest for what may be viewed as a “token” amount, along with a pledge to … Continue reading

IIROC’s 2018 Enforcement Report: Strengthening Enforcement Authority Across Canada

Overview On May 16, 2019, the Investment Industry Regulatory Organization of Canada (IIROC) published its 2018 Enforcement Report (the Report).  The Report summarizes IIROC’s enforcement activities in 2018 and provides an update on the progress of IIROC’s enforcement priorities, chief among which has been the strengthening of IIROC’s legal authority and enforcement powers across Canada. … Continue reading

The AMF is not the sole arbiter of what is relevant and what should be disclosed

In AMF v. TMF, Baazov, et al. (Court File No. 500-11-052989-171), the Quebec Superior Court confirmed that the Financial Markets Administrative Tribunal (the Tribunal) has the power to order the Autorité des marchés financiers (AMF), Quebec’s securities regulator, to disclose documents to individuals against whom the AMF is seeking freeze orders and cease-trade orders in … Continue reading
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