Tag archives: Ontario Securities Commission

Quadrexx Hedge Capital Management Ltd. v. Ontario Securities Commission: First Application Of The Vavilov Standard of Review to an OSC Decision

In a previous post, we discussed the new standard of appellate review of tribunal decisions described in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65 (Vavilov) and its implications for the Ontario Securities Commission (the OSC). In Quadrexx Hedge Capital Management Ltd. v. Ontario Securities Commission, 2020 ONSC 4392, the Divisional Court considered for the first time the application of Vavilov to a decision of an OSC Hearing Panel.

Background

After a contested hearing, a Hearing Panel of the OSC (the Panel) found that Miklos Nagy and Tony Sanfelice, … 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 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

SEC ruling on The DAO signals increased acceptance of blockchain-based securities

On July 25, 2017, the Securities and Exchange Commission (SEC) issued a statement on the regulatory significance of offers and sales of digital assets carried out using distributed ledger or blockchain technology.  That statement followed the SEC’s Report of Investigation into The DAO, an unincorporated organization designed to issue tokens administered on a distributed ledger that would allow the holder to share in the anticipated earnings of the organization. The DAO and its structure drew a great deal of attention after a hacker stole approximately 1/3 of its assets.

The SEC’s investigation, as summarized in the Report of … Continue Reading

Home Capital Group Inc. Settlement with the OSC: Lessons Learned

On August 9, 2017 the Ontario Securities Commission (OSC) approved a settlement agreement entered into by Home Capital Group Inc (HCG), a reporting issuer in the residential and commercial lending business, Gerald Soloway (Soloway), its former founder and CEO, Robert Morton (Morton), its former CFO and  Martin Reid (Reid), its former President. Both Morton and Reid were also members of the Company’s Disclosure Committee at the relevant time.

The settlement resolves allegations made by OSC Staff that, inter alia,

  1. over a period of several months in 2015, HCG materially
Continue Reading

OSC Approves Its 9th No Contest Settlement

On July 13, 2017, the Ontario Securities Commission (OSC) announced that it had approved yet another “no-contest” settlement resolving unproven allegations by OSC Staff that there were inadequacies in certain mutual fund dealers’ systems of controls and supervision which resulted in clients paying excess fees that were not detected or corrected in a timely manner, constituting a breach of section 11.1 of National Instrument 31-103 – Registration Requirements, Exemptions and Ongoing Registrant Obligations, and  conduct contrary to the public interest. The  dealers neither admitted nor denied the allegations.

As in a string of other similar no contest … Continue Reading

Johnny Come Lately: The Conclusion of the OSC Hearing Into Sino-Forest

By now the facts underlying the recently concluded Ontario Securities Commission hearing into Sino-Forest Corporation should be well known.  Sino-Forest was a reporting issuer in Ontario, reportedly in the business of operating commercial forest plantations in the People’s Republic of China.  Between 1995 and its demise in 2013, when it entered into a Plan of Compromise and Reorganization resulting in its former bondholders receiving substantially all of its remaining assets, it raised approximately $3 billion from investors.

Shortly after a short seller’s report in June 2011 alleging that the Company was a fraud, Commission Staff commenced an investigation that resulted … Continue Reading

Re OSC decision In the Matter of Issam El-Bouji, et al.

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

Fiorillo v Ontario Securities Commission: deference wins the day on insider trading appeal

The Divisional Court recently upheld an Ontario Securities Commission (Commission) decision sanctioning a number of individuals for insider trading and tipping, and acting contrary to the public interest.[1]

This is the latest in a series of unsuccessful appeals from Commission decisions, suggesting that the courts’ significant deference to decisions of that tribunal makes most appeals an exercise in futility.[2]

Background to the Appeal

On February 11, 2015, the Commission released its decision finding that Eda Agueci, Henry Fiorillo, Dennis Wing, and Kimberly Stephany had contravened the insider trading and tipping provisions under s. 127 of the Securities ActContinue Reading

“Substance over form” in defining a security

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

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