In Miller v. FSD Pharma Inc. (Miller), a decision released June 23, 2020, Morgan J. of the Ontario Superior Court of Justice granted leave to proceed with a putative secondary market securities class action under s. 138.3 of Part XXIII.1 of the Ontario Securities Act (OSA) against FSD Pharma Inc. (FSD), a new entrant into the Ontario cannabis production market. The Miller decision is significant for two reasons. First, the Court applied the “market impact” test for assessing the materiality of the alleged misrepresentations. Second, the Court adopted a contextual approach to … Continue Reading
The recent decision of the Ontario Court of Appeal in Wright v. Horizons ETFS Management (Canada) Inc. (2020 ONCA 337) is significant for two reasons. First, it recognizes the existence of a duty of care owed by a fund manager to purchasers of units of the fund in relation to the allegedly negligent design of the fund. In addition, it opens the door to potential claims under s. 130 of the Ontario Securities Act against fund managers in relation to misrepresentations in the fund’s prospectus notwithstanding that the funds are sold over a stock exchange.
The proposed class … Continue Reading
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.
In Pearson (Re), the Commission refused a motion by a disgruntled minority shareholder of LeadFX Inc. (“LeadFX”), for standing to bring a s. 127 proceeding against that company. Pearson was seeking orders under s. 127, including an order restraining LeadFX from … Continue Reading
The Ontario Superior Court of Justice has released what appears to be the final chapter in the Ontario Securities Commission’s (OSC) prosecution of Daniel Emerson Tiffin and Tiffin Financial Corporation.
In July 2014, the Ontario Securities Commission’s administrative proceedings against Rezwealth Financial Services Inc., Pamela Ramoutar, Justin Ramoutar, Tiffin Financial Corporation, Daniel Tiffin, 2150129 Ontario Inc., Sylvan Blackett, 1778445 Ontario Inc. and Willoughby Smith, resulted in an order under s. 127 of the Securities Act (the Act) prohibiting Daniel Emerson Tiffin (Mr. Tiffin) and TFC from trading in securities or relying upon any exemption … Continue Reading
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
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.
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 routinely gained access to non-public, confidential information regarding certain transactions. Ms. Hutchinson was alleged to have knowingly provided non-public information about six transactions to Cameron Cornish, another respondent in the proceeding, in violation of section 76(2) of the Ontario Securities Act, which prohibits insider tipping.… Continue Reading
In December 2017, Ontario instituted a civil cause of action for employees who experience reprisals from their employers for providing information or assisting in certain other ways in regulatory or criminal investigations or proceedings involving contraventions of securities or commodity futures laws (whistleblowing).
The identical amendments to s. 121.5 of Ontario’s Securities Act and s. 54.1 of the Commodity Futures Act are wide in scope and protect “whistleblowers” as follows:
- The new civil cause of action may entitle the employee to reinstatement or to payment of two times the amount of any remuneration they were denied as part
In the recently released decision in Finkelstein v. Ontario Securities Commission, the Ontario Court of Appeal (the Court) considered for the first time the definition of “person in a special relationship with an issuer” found in s. 76(5)(e) the Securities Act (the Act) as it applies to successive tippees who possess material, non-public information about an issuer.
The decision confirms that a person may be found to have contravened the insider trading or tipping provisions of the Act where he ought reasonably to have known that the source of the material non-public information about the issuer in … Continue Reading
A great deal has been written recently about the possible regulatory uncertainty surrounding Initial Coin Offerings (ICOs) in Canada. In an ICO, a newly issued cryptocurrency is sold to purchasers, who acquire a right of ownership symbolized by a “coin” or token, which may appreciate in value. Depending upon the characteristics of the ownership interest that is acquired, the “coin” may constitute a security. Once issued, the way a coin may be traded is a product of its design; some coins may be freely traded on exchanges as if they were traditional securities, while others may only be … Continue Reading
In Yip v. HSBC Holdings plc et al., 2017 ONSC 5332, Justice Perell was called upon to determine the jurisdictional reach of the Ontario courts to protect Canadian and foreign investors when the defendant is a foreign corporation whose shares do not trade on a Canadian stock exchange.
Yip, an Ontario resident who purchased shares of HSBC Holdings (Holdings) on the Hong Kong Stock Exchange, asserted both a statutory secondary market and a common law misrepresentation claim against Holdings and one of its former employees, alleging that he and other purchasers on foreign exchanges were misled … Continue Reading
In Kaynes v. BP, P.L.C.  ONSC 5172, Justice Perell characterizes his decision about the operation of the limitation period set out in s. 138.14 of Part XXIII.1 of the Ontario Securities Act (the Act) as “the latest sequel or prequel in what has turned out to be the case law equivalent of a horror-movie franchise”.
The decision arises from a Rule 21 motion brought by BP for a ruling that the putative class members’ statutory misrepresentation claims were statute-barred under s. 138.14. The motion was brought prior to argument of the motion for leave under … Continue Reading
A gold mining company chooses not to disclose preliminary mineral sampling results that it viewed as unreliable. Further testing eventually proves the preliminary sample to be inaccurate. In Wong v Pretium Resources, 2017 ONSC 3361 the Ontario Superior Court of Justice granted leave for a plaintiff to proceed with a securities class action under s. 138.3 of the Ontario Securities Act (the OSA) alleging secondary market misrepresentation for failing to disclose the preliminary results. What gives?
Is there gold in the hills?
Pretium Resources (Pretium) is a mineral exploration company listed on the TSX and NYSE … Continue Reading
After a proceeding has ended, does the Ontario Securities Commission retain jurisdiction to give directions to the parties or grant other relief? That is the question that was recently before the Commission in In the Matter of Issam El-Bouji. In answering the question in the negative, the Commission confirmed that it does not have inherent jurisdiction.
In 2014, the Commission made an order prohibiting Mr. El-Bouji from acting as the Ultimate Designated Person (“UDP”) of the moving parties, Global RESP Corporation and Global Growth Assets Inc. (the “Order”). After the Order was handed down, Mr. … Continue Reading
What constitutes a “security” under the Ontario Securities Act? In Ontario (Securities Commission) v Tiffin, 2016 ONCJ 543, the accused was charged with three offences under the Act for issuing a number of promissory notes while prohibited from trading in securities. Under the Act, security is defined to include “a bond, debenture, note or other evidence of indebtedness.” The primary issue before the Ontario Court of Justice was whether the promissory notes issued fell within that definition, or were instead private loan agreements not subject to its application.
The court applied the United States Supreme Court decision in … Continue Reading