Tag archives: securities act

Passive Reliance on Fellow Director is Insufficient for Due Diligence Defence

In a judgment dated June 9, 2020, the Superior Court of Quebec in Autorité des marchés financiers v. Descheneaux, 2020 QCCS 1779 (Justice R. Mongeon) confirmed that passive reliance on a fellow director, more knowledgeable and experienced with the legal requirements of raising capital under applicable securities laws, is insufficient to ground a due diligence defence to a strict liability offence such as breaches to the Quebec Securities Act.

Mr. Descheneaux, an officer and director of delSECUR, faced 18 counts of breaches of the Securities Act, for distributing securities without a prospectus and for acting as an … 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 XXIII.1 of the Ontario Securities Act  in the context of a restatement, and the test for leave to bring such a statutory claim.   

 … Continue Reading

Court of Appeal of Alberta Affirms Broad Definition of “Security”

In R. v. Stevenson[1], the appellant was charged with a number of offences under the Securities Act[2] (the Act) in connection with the raising of money from the public through “loan agreements”.  He was acquitted at trial[3] on the basis that the loan agreements did not constitute “securities” as defined in the Act.[4]

The loan agreements were for a term of six months and provided a return to the lender of between 400 and 2,000 per cent, payable from the borrower’s profits. The borrower represented to the lenders that he had contracted with the … Continue Reading

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.

The recent decision of the Ontario Court of Appeal in Rahimi v. SouthGobi Resources Ltd., 2017 ONCA 719 provides further guidance concerning the role of the judge on a motion for leave to commence a secondary market class action pursuant to s. 138.8(1) of the Securities Act (the Act) and the application of the defence of reasonable investigation.

In particular, the decision stands for the following:

  1. On a motion for leave under s. 138.8, the motion judge’s obligation is to critically scrutinize the entire body of evidence filed on the motion, including gaps in the evidence filed by the
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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
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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

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