Topic: Other developments

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Stay of proceedings based on AMF failings in its disclosure of evidence : Baazov v. AMF, 2018 QCCQ 4449

In the recent decision Baazov v. AMF, Mascia J. of the Quebec Court, Criminal and Penal Chamber granted a stay of proceedings in respect of all tipping, insider trading and market manipulation charges laid against the accused based on the repeated failings of the prosecutor, the Autorité des marchés financiers (AMF), the Quebec securities regulator, … Continue reading

The Importance of Cooperation Among Interjurisdictional Securities Regulators: United States Securities and Exchange Commission v. Autorité des marchés financiers, 2018 QCCQ 4417

In the recent decision of United States Securities and Exchange Commission v. Autorité des marchés financiers, 2018 QCCQ 4417, the Quebec Court, Criminal and Penal Chamber held that the United States Securities and Exchange Commission (SEC) had the required interest under section 122 of the Code of penal procedure (CPP) to be allowed to examine … Continue reading

Ontario Securities Commission confirms test for severance

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 … Continue reading

Copy and Paste Securities Fraud? The U.S. Supreme Court to Decide

Last month, the U.S. Supreme Court granted certiorari to hear a case where an investment banker copied and pasted misstatements from his boss into emails that, at his boss’s request, he sent to prospective debenture purchasers.  In Lorenzo v. Securities and Exchange Commission, 872 F.3d 578 (D.C. Cir. 2017), a divided United States Court of Appeals … Continue reading

Parity in sentencing for insider trading: AMF v. Beauchamp, 2018 QCCQ 3604

In a recent decision, AMF v. Beauchamp, Délisle J. of the Quebec Court, Criminal and Penal Chamber, refused to follow the request of the Quebec securities regulator, the Autorité des marchés financiers (AMF), that a prison term be added to the sentence of an accused in an insider trading case. Background to the Decision Francis … Continue reading

Alberta Securities Commission Policy 15-601: Credit for Exemplary Cooperation in Enforcement Matters – New Provision for No-Contest Settlement Agreements

On October 25, 2017, we wrote about the Alberta Securities Commission’s (ASC) new Policy 15-601 which “explains the use of discretion by ASC staff when considering the appropriate enforcement action and assessing the appropriate sanction for misconduct.”  A link to the publication is here. As we predicted in October, the ASC recently issued a press … Continue reading

US Supreme Court puts an end to untimely piggyback class actions

Companies confronting serial class actions won much needed relief from the US Supreme Court yesterday, in a decision that held that a class action tolls statutes of limitations only for putative class members’ individual claims, and not for later-filed class actions. A second class action must be filed within the limitations period, or it is … Continue reading

UPDATE: No Room for Double Talk: The Ontario Court of Appeal Addresses Restatements, the Reasonable Investigation Defence and the Test for Leave in Rahimi v. SouthGobi Resources Ltd.

On May 31, 2018, the Supreme Court of Canada denied SouthGobi Resources Ltd.’s application for leave to appeal the decision of the Ontario Court of Appeal, which I provided an update on October 7, 2018.  The Court of Appeal decision provides guidance concerning the availability of the defence of reasonable investigation to a claim under Part … Continue reading

Still in Jeopardy: Supreme Court of Canada refuses leave to appeal BC Court of Appeal decision confirming that a Securities Commission financial penalty does not prevent being penalised in criminal fraud proceedings

This morning the Supreme Court of Canada refused leave to appeal[1] from the decision of the BC Court of Appeal in R. v. Samji[2], which confirms that the Charter does not preclude criminal proceedings where a defendant had already been ordered to pay penalties for fraud under the Securities Act. Rashida Samji, a former licensed notary … Continue reading

Divisional Court confirms that interlocutory OSC orders not eligible for appeal, judicial review

In the recent decision of Cheng v Ontario Securities Commission, 2018 ONSC 2502, the Divisional Court held that an interlocutory order of the OSC was not subject to challenge through an appeal or judicial review. Background The OSC commenced enforcement proceedings against Benedict Cheng in April 2017 on allegations of insider tipping.  Cheng brought a … 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 … Continue reading

OSC Panel Approves Settlement Agreement for Insider Tipping Without Profit Disgorgement or Administrative Penalty

The Ontario Securities Commission’s recent decision in Re Hutchinson confirmed the important role of cooperation with Commission Staff in reducing sanctions for breaches of Ontario’s securities law. Background Donna Hutchinson worked as a legal assistant at a large Toronto law firm, assisting with merger and acquisition transactions. Through the course of her work, Ms. Hutchinson … Continue reading

OSC Continues Mediation Program on a Permanent Basis

On April 9, 2018, the Ontario Securities Commission (OSC) announced that its Mediation Program, which began as a pilot program in May 2015, will be continuing on a permanent basis. The Mediation Program provides respondents represented by counsel, as well as enforcement staff, with the option to seek resolution through an independent third party mediator. … 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 … Continue reading

Civil Forfeiture in the Securities Context

Administrative fines are are regularly imposed by the Ontario Securities Commission (the OSC) in enforcement proceedings as sanctions for violations of Ontario securities law. Less well-known, but equally important, is the ability of the OSC to require wrongdoers to forfeit to the Crown the ill-gotten proceeds of unlawful activities. This post outlines the process by … Continue reading

Bustle without the Hustle not an “Act in Furtherance of a Trade” under the Ontario Securities Act

A recent decision by the Ontario Court of Justice provides lessons about the scope of the Ontario Securities Commission (OSC)’s powers to regulate acts “in furtherance of a trade”.  The OSC’s case was against two individuals who helped create a website for a new company.  The website included an investors relations page which stated that … Continue reading

Aurora/CanniMed: Canadian securities regulators provide guidance on takeover bids in Canada – Expect to see more hard lock-ups and fewer tactical poison pills

Key takeaways: expect to see an increased use of hard lock-ups (that is, lock-ups in which a shareholder agrees to tender shares even if a superior bid comes along), which will provide bidders with reduced risk during the new 105-day bid period well-structured hard lock-ups do not necessarily result in target shareholders being joint actors … 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 … Continue reading

Federal court holds that CFTC can regulate virtual currencies as commodities

On March 6, 2018, in a fraud proceeding involving a virtual currency product, a New York federal court held that virtual currencies can be regulated by the Commodity Futures Trading Commission (CFTC) as commodities. Commodity Futures Trading Commission v. McDonnell (E.D.N.Y. Mar. 6, 2018).[1] This ruling marks the first federal judicial endorsement of the CFTC’s … Continue reading

New Corporate Governance Website Disclosure Requirements for TSX-Listed Issuers In Effect April 1, 2018

Amendments to the TSX Company Manual (the Manual), which places new website disclosure requirements (Requirements) on TSX-listed issuers, are coming into effect on April 1, 2018 in accordance with the newly adopted section 473 of the Manual. Among other things, the Requirements mandate website publication of any majority voting and advance notice policies that have … Continue reading

Reforming Class Actions in Ontario – Your Input Please!

On March 9, 2018, the Law Commission of Ontario (LCO) released its Consultation Paper entitled “Class Actions: Objectives, Experiences and Reforms”. The Consultation Paper is the next phase of the LCO’s Class Actions Project which is set to conduct a general review of the class action landscape in Ontario, with a view to providing a … Continue reading

IIROC Seeks Public Comment on Proposed New Disciplinary Options

On February 22, 2018, the Investment Industry Regulatory Organization of Canada (IIROC) announced that it was launching a public consultation on two new disciplinary approaches for dealing with minor violations of IIROC rules and the resolution of disciplinary cases. IIROC’s Enforcement Department is specifically responsible for enforcing IIROC’s Dealer Member Rules relating to the sales, … Continue reading

No Early Disclosure: Quebec Court of Appeal Confirms Protection for Public Issuer

Plaintiff-shareholders in Quebec are not entitled to early document disclosure when seeking leave to bring claims against public issuers for secondary market liability. The Quebec Court of Appeal’s decision in Amaya[1] confirms that the “screening mechanism” under the Quebec Securities Act[2] to root out frivolous claims by plaintiff-shareholders is analogous to the statutory remedies available … Continue reading

Supreme Court Holds Individuals Must Report to the SEC to Qualify as Whistleblowers under Dodd-Frank

On Wednesday, February 21, 2018, the Supreme Court resolved a circuit split by unanimously holding that an employee must report suspected securities law violations to the SEC in order to qualify as a whistleblower entitled to protection from retaliation under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (“Dodd-Frank”).  Dodd Frank’s anti-retaliation … Continue reading
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