Topic: Securities regulatory decisions

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Request to Stay a Securities Regulatory Sanctions Hearing: An Uphill Battle

Photo of Linda FuerstBy Linda Fuerst on Posted in Securities regulatory decisions
In Re Mountainstar Gold Inc., 2019 BCSECCOM 123, the British Columbia Securities Commission gave short shrift to a request by the respondents for a stay of the Commission’s imposition of sanctions against them until after certain legal proceedings in Chile. At the conclusion of the Commission’s hearing on the merits, it determined that over a … Continue reading

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

Photo of Sophie MelchersPhoto of Caroline LarouchePhoto of Andres C. GarinBy Sophie Melchers, Caroline Larouche and Andres C. Garin on Posted in Other developments, Securities regulatory decisions
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

Large and generous interpretation of “investment contract” and “distribution” under the Quebec Securities Act: AMF v. Desmarais, 2019 QCCA 898

Photo of Sophie MelchersBy Sophie Melchers on Posted in Other developments, Securities regulatory decisions
In its recent decision (AMF v. Desmarais), the Court of Appeal upheld the conviction of a Montreal lawyer who played a central role in the distribution of investment contracts without a prospectus and who acted as a dealer without being registered as such, while reducing his prison sentence and fine. Facts of the case Jean-Pierre … Continue reading

Imposition of OSC Sanctions Following a Conviction for an Offence Relating to Securities: The Availability of Carve-Outs in the Public Interest

Photo of Linda FuerstBy Linda Fuerst on Posted in Securities regulatory decisions, White collar crime
In Theroux (Re), 2019 ONSEC 20 a hearing panel of the Ontario Securities Commission (OSC) was called upon to decide whether an individual convicted of five counts of fraud over $5,000 contrary to section 380(1)(a) of the Criminal Code should have the benefit of carve-outs from an order under section 127(10) of the Ontario Securities … Continue reading

Harrington v IIROC: No Equitable Duty Owed by Public Sector Regulators to Disclose Information to Victims of Wrongdoing

Photo of Linda FuerstPhoto of Peter Tae-Min ChoiBy Linda Fuerst and Peter Tae-Min Choi on Posted in Other developments, Securities regulatory decisions
On December 31, 2018, the Ontario Superior Court of Justice dismissed an application by Harrington Global Opportunities Fund (Harrington) for a Norwich order against the Investment Industry Regulatory Organization of Canada (IIROC). Harrington sought the order to compel IIROC to provide information that would identify parties which had allegedly been involved in manipulating the market … Continue reading

Alberta Securities Commission Declines to Stay Enforcement Proceedings In Face of Parallel Class Actions

Photo of Steven LeitlBy Steven Leitl on Posted in Class actions, Securities regulatory decisions
In February 2019, the Alberta Securities Commission (ASC) declined to stay the hearing of pending ASC enforcement proceedings on the basis of the existence of parallel, pending class action proceedings. Background In June 2018, Staff of the ASC issued a notice of hearing against Alberta divisions of the Lutheran Church-Canada and several of their former … Continue reading

Ontario Securities Commission awards whistleblowers $7.5 million in first ever payout

Photo of Peter Tae-Min ChoiBy Peter Tae-Min Choi on Posted in Other developments, Securities regulatory decisions
On July 14, 2016, the Ontario Securities Commission (OSC) launched the Whistleblower Program (the Program). Under the Program, individuals that provide information on violations of Ontario’s securities law to the OSC are eligible for awards of between 5% and 15% of total monetary sanctions or voluntary payments. The maximum amount a whistleblower can collect is … Continue reading

Re Meharchand: An affirmation of fundamental securities law principles

Photo of Peter Tae-Min ChoiBy Peter Tae-Min Choi on Posted in Securities regulatory decisions
On October 19, 2018, the Ontario Securities Commission (OSC) issued reasons for Re Meharchand, a case confirming core concepts in securities law including the definition of an “investment contract”, registration when in the business of selling securities, and the test for fraud. Background The respondents, Mr. Meharchand and his company, Valt.X were in the business … Continue reading

The Quebec Court of Appeal rules that dissident rights do not apply to trust unitholders

Photo of Saam Pousht-MashhadBy Saam Pousht-Mashhad on Posted in Other developments, Securities regulatory decisions
On January 21, 2019, the Quebec Court of Appeal ruled  in O’Leary Funds Management c. Boralex Inc., 2019 QCCA 84, that dissident rights under business corporations acts do not apply to trusts. Unitholders of a trust must therefore ensure that their rights are recognized under the trust agreement or the Civil Code of Quebec. The … Continue reading

Be Careful What You Say – SEC successfully concludes enforcement proceedings against robo-advisors for false advertising and misleading disclosures

Photo of Andrew McCoombBy Andrew McCoomb on Posted in Cross border issues, Other developments, Securities regulatory decisions
On December 21, 2018, the Securities and Exchange Commission (SEC) settled proceedings against two robo-advisors for making false statements about investment products and publishing misleading advertising. The proceedings were the SEC’s first enforcement actions against robo-advisors, providing guidance on some of the disclosure issues robo-advisors may face going forward. Wealthfront proceedings The first action involved … Continue reading

Ontario Court of Appeal Grants Leave to Appeal Tiffin Decision: Will Determine Role of the “Family Resemblance” Test in Defining Securities under the Securities Act

Photo of Erika AnschuetzBy Erika Anschuetz on Posted in Other developments, Securities regulatory decisions
It seems that the saga of the Ontario Securities Commission’s prosecution of Daniel Emerson Tiffin and Tiffin Financial Corporation is not over yet.  On November 28, 2018 (2018 ONCA 953), the Ontario Court of Appeal granted leave to appeal the May 15, 2018 merits decision of Charney, J which rejected the “family resemblance” test and … Continue reading

Stop the presses! Canadian securities regulators raise concerns about press releases and other promotional activities

Photo of Katherine PrusinkiewiczBy Katherine Prusinkiewicz on Posted in Other developments, Securities regulatory decisions
The Canadian Securities Administrators (CSA) have issued a notice regarding misleading promotional activities by issuers.  The notice includes examples such as press releases, presentations, social media posts and other marketing materials that provide insufficient or unbalanced information or that include unsubstantiated claims about the issuer. Problematic Promotional Practices Examples of potentially misleading promotional activities identified … Continue reading

Crime Doesn’t Pay: OSC Permanently Bans Convicted Fraudster

Securities litigation and enforcementBy Danny Urquhart on Posted in Securities regulatory decisions, White collar crime
On November 26, 2018, the Ontario Securities Commission (OSC) issued an order permanently prohibiting Daniel Reeve, a financial planner based in the Kitchener, Ontario area, from participation in Ontario’s capital markets, including trading in any securities and becoming or acting as a registrant. The permanent ban came after Reeve was convicted in the Ontario Superior … Continue reading

When Will Referral Arrangements Constitute Trading under the BC Securities Act?

Photo of Kaitlin SmileyBy Kaitlin Smiley on Posted in Securities regulatory decisions
In a recent decision of the BC Securities Commission (BCSC), the BCSC provides helpful guidance concerning when referral arrangements cross the line and become trading for which registration is required. Chien-Hua Liu (Liu) and two affiliated corporations referred BC and Hong Kong investors to two issuers, leading to the purchase of over $6.5 million in … Continue reading

Divisional Court Upholds OSC Finding that Trading Software License Contracts are Securities Within Meaning of Securities Act

Photo of Erika AnschuetzBy Erika Anschuetz on Posted in Other developments, Securities regulatory decisions
The Ontario Superior Court of Justice in Furtak v Ontario (Securities Commission), 2018 ONSC 6616, has upheld the Ontario Securities Commission’s (OSC) merits and sanctions decisions with respect to the Strictrade Offering, which we previously reported on here. Background In 2015, OSC Staff brought enforcement proceedings against Edward Furtak, Axton 2010 Finance Corp., (Axton), Strict … Continue reading

The Hard Way – SEC announces first penalties and compliance roadmap for unregistered ICOs

Photo of Andrew McCoombBy Andrew McCoomb on Posted in Cross border issues, Other developments, Securities regulatory decisions, Uncategorized
On November 16, 2018, the Securities and Exchange Commission (SEC) announced consent orders settling actions in respect of two unregistered initial coin offerings (ICOs), including the first fines levied against non-compliant ICO issuers made by the SEC to date. The consent orders demonstrate the SEC’s willingness to follow through with enforcement proceedings against issuers of … Continue reading

Re Fauth: A Primer on ss. 75(1)(a), 92(4.1) and 93(b) of Alberta’s Securities Act

Photo of Steven LeitlPhoto of Aditya BadamiBy Steven Leitl and Aditya Badami on Posted in Other developments, Securities regulatory decisions, White collar crime
The Alberta Securities Commission (ASC) recently released its decision in the matter of Re Fauth, finding the respondent, Vernon Ray Fauth (Fauth), in breach of ss. 75(1)(a), 92(4.1) and 93(b) of Alberta’s Securities Act, RSA 2000, c S-4 (the Act). The decision offers some important insight on issues regarding limitation periods, illegal dealing, misrepresentations, and … Continue reading

Time is of the Essence: Public Interest Considerations on a Motion for Standing to bring a s. 127 Proceeding Before the Ontario Securities Commission

Photo of Linda FuerstBy Linda Fuerst on Posted in Securities regulatory decisions
A private party cannot commence a proceeding under s. 127 of the Ontario Securities Act (the “Act”) seeking enforcement remedies as a matter of right.  In Pearson (Re), 2018 ONSEC 53 the Ontario Securities Commission provides further guidance concerning when it will permit someone other than Enforcement Staff to commence such a proceeding before it. … Continue reading

Supreme Court of Canada Rules that Proposed Canadian Cooperative Capital Markets Regulatory System is Constitutional

Photo of Jeremy DevereuxPhoto of Justine SmithBy Jeremy Devereux and Justine Smith on Posted in Other developments, Securities regulatory decisions
Today the Supreme Court of Canada (the Supreme Court) released its much-anticipated decision on the reference regarding the proposed Canadian Cooperative Capital Markets Regulatory System, finding that the proposed national regulatory system is constitutional. Previous Attempts to Create National Securities Regulator It has been suggested by the a number of governments, academic commentators and others … Continue reading

The Scope of Securities Commission’s Public Interest Jurisdiction: What Constitutes Abuse of the Capital Markets?  

Photo of Linda FuerstBy Linda Fuerst on Posted in Securities regulatory decisions
The Scope of Securities Commission’s Public Interest Jurisdiction: What Constitutes Abuse of the Capital Markets? In Re Hamilton, 2018 BCSEECOM 290, the British Columbia Securities Commission (BCSC) was called upon, yet again, to consider the scope of its public interest jurisdiction in an enforcement proceeding pursuant to s. 161 of the British Columbia Securities Act, RSBC 1996, c. … Continue reading

Motions for Further Disclosure in OSC Proceedings: Privilege, Relevance and Proportionality

Photo of Linda FuerstBy Linda Fuerst on Posted in Securities regulatory decisions
In a recent decision of the OSC in Re Caldwell Investment Management Ltd. (October 12, 2018), a hearing panel (the “Panel”) denied a motion by Caldwell Investment Management Inc. (“Caldwell”) for further pre-hearing disclosure from OSC Staff. The motion was made in the context of an upcoming enforcement proceeding alleging, among other things, that Caldwell … Continue reading

Even “Small Frauds” May Warrant the Imposition of Significant Sanctions by Securities Regulators

Photo of Peter Tae-Min ChoiBy Peter Tae-Min Choi on Posted in Securities regulatory decisions, White collar crime
In Re Davis, 2018 BCSECCOM 284, the British Columbia Securities Commission upheld permanent market prohibitions against Mr. Davis who committed fraud on one investor in the aggregate amount of (only) $7,000. Background Mr. Davis, who was never registered under the Securities Act (B.C.), purported to sell shares that he did not own to an investor … Continue reading

From boom to busted: TMF deems PlexCoins as investment contracts

Photo of Saam Pousht-MashhadBy Saam Pousht-Mashhad on Posted in Other developments, Securities regulatory decisions
The legal noose is tightening around the necks of rogue cryptocurrency issuers in Quebec. PlexCorps’s legal troubles, as covered in our previous post, have deepened. In Autorité des marchés financiers c. PlexCorps, 2018 QCTMF 91, the Tribunal des Marchés Financier (TMF) qualified PlexCoin as an investment contract within the meaning of Quebec’s Securities Act. This … Continue reading
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