Class members opting out of secondary-market liability class actions and instituting their own claims – Are there prescription or forfeiture defences available under the Quebec regime?

The Quebec Superior Court, in California States Teachers’ Retirement System v. Bausch Health Companies Inc. (2020 QCCS 275), recently clarified the rules applicable to limitation periods in the context of secondary-market liability actions under the Quebec Securities Act (QSA).

Much like its Ontario counterpart, s. 225.4 QSA provides for an authorization mechanism whereby applicants wishing to institute a secondary-market liability claim against a public issuer must convince the court that their actions are taken in good faith and have a “reasonable possibility of success”. While such actions can take on the form of class … Continue Reading

Unreasonable delay and Jordan’s presumptive ceilings – different approach from the SCC on verdict deliberation time

Canadian securities regulators have jurisdiction to lay charges under provincial securities legislation, and have prosecuted serious securities offences criminally. The persons so charged have a right to be tried within a reasonable time. Questions have arisen as to whether or not a court’s deliberation time was to be factored in the timelines identified in the now seminal case R. v. Jordan, 2016 SCC 27 (“Jordan”). Despite the fact that the R. v. K.G.K., 2020 SCC 7 (“KGK”) case is a criminal case, the teachings of the Supreme Court of Canada described below are transposable … Continue Reading

The Show Must Go On: The OSC Requires Enforcement Hearing to Continue Notwithstanding COVID-19

In a decision released on March 23, 2020, a Hearing Panel of the Ontario Securities Commission (OSC) ruled, over the objections of the respondents, that an oral hearing that had commenced under s. 127 of the Ontario Securities Act into allegations of fraud, misleading investors, unregistered trading and the illegal distributions of securities would continue at least partly in writing due to the COVID-19 pandemic (Re Paramount, 2020 ONSEC 9).

History of the Proceeding

The merits hearing began on March 10, 2020 and had been scheduled to resume on March 23.  It had proceeded for … Continue Reading

Quebec Court of Appeal confirms administrative penalties applications not subject to general rules of prescription

The Quebec Court of Appeal recently dismissed the appeals launched by directors and officers of a reporting issuer, Nstein Technologies, against two judgments rendered by the Court of Quebec in a statutory appeal of a judgment by the Quebec securities tribunal, the Tribunal administratif des marchés financiers (the TMF).

The TMF had granted an application by the Quebec securities regulator, the Autorité des marchés financiers (the AMF), to impose administrative penalties against the appellants for breaches to insider trading and tipping provisions under the Québec Securities Act (the QSA). The AMF’s application essentially stemmed from a decision … Continue Reading

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

Delaware Supreme Court holds Delaware corporations can adopt federal-forum selection provisions

On March 18, 2020, the Delaware Supreme Court reversed the Delaware Court of Chancery and held that Delaware corporations can adopt federal-forum selection provisions (FFPs) requiring that claims arising under the federal Securities Act of 1933 (1933 Act) be brought in federal court. The case is styled Salzberg et. al v. Sciabacucchi, No. 346, 2019, 2020 WL 1280785 (Del. Mar. 18, 2020). Companies should strongly consider using the Salzberg decision as an opportunity to adopt an FFP. Absent such a provision, 1933 Act class actions – which are frequently filed after initial and secondary public offerings – may be … Continue Reading

Landmark Changes to the BC Securities Act are Set to Take Effect March 27

As previously reported, on October 21, 2019, the BC provincial government announced sweeping and significant changes to the BC Securities Act which are intended to give the BC Securities Commission (BCSC) the strongest powers in the country to impose tougher consequences for wrongdoers.  The provincial government recently issued an order in council confirming that these changes will take effect on March 27.

The amendments not only broaden the types of misconduct the BCSC regulates, but provide for expanded powers to collect financial sanctions through enhanced abilities to freeze property and new powers to seize registered retirement savings … Continue Reading

Yukon Court of Appeal reinstates transaction price as fair value of shares

The Yukon Court of Appeal recently allowed an appeal from a Supreme Court decision that awarded dissenting shareholders US$71.46 per share as fair value of their InterOil shares, a 43% premium over the transaction price of US$49.98. The trial court decision had generally been viewed as an outlier in fair value case law, given that the award represented a significant premium over the transaction price. The Court of Appeal found the transaction price reflected fair value and reduced the award to that amount.

It made a number of highly relevant and important remarks regarding the probity of evidence of fair … 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

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. Supp. 3d —, No. 15-cv-4194, 2020 WL 466629 (C.D. Cal. Jan. 28, 2020), the District Court held that Plaintiffs sufficiently pled that their purchases of Defendant’s unsponsored ADRs on the over-the-counter (OTC) market constituted domestic transactions in securities, as well as alleging the Defendant’s … Continue Reading

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