When might a wrong opinion give rise to prospectus misrepresentation? The U.S. Supreme Court recently addressed this question in its much-anticipated decision in Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund. Its answer provides a useful point of comparison and discussion for Canadian securities lawyers.… Continue Reading
On April 17, 2015, the Supreme Court of Canada (SCC) rendered its opinion in Theratechnologies inc. v. 121851 Canada inc., 2015 SCC 18 (Theratechnologies), its first decision on the Quebec statutory secondary market liability regime adopted in 2007 pursuant to a reform of the Quebec Securities Act (QSA). Like its sister statutes in other provinces, although the QSA regime facilitates a plaintiff’s burden, mostly by presuming that variation in market price is linked to a misinformation or omission, it also imposes an authorization process under which a claimant must establish that its action is brought in good … Continue Reading
At the end of 2005, Ontario legislation came into effect which enabled aggrieved shareholders to bring a statutory action for secondary market misrepresentation against issuers and their directors and officers (and others) without the requirement to establish individual reliance. In order to commence such an action, however, a shareholder must first obtain leave from the Superior Court. Much of the jurisprudence in secondary market securities class actions has been devoted to examining the standard for leave.… Continue Reading
In a rare appellate court decision, the Court of Appeal in Walton v. Alberta (Securities Commission), 2014 ABCA 273, has set aside a decision by the Alberta Securities Commission and has held that any monetary penalties levied must be proportionate to the circumstances of the offender and supported by reasons. The Court also held that findings cannot be based upon speculation and that the Commission had improperly interpreted the “recommending or encouraging” provisions of the Alberta Securities Act (the “Act”) in a decision that is certain to give pause to Securities Commissions across Canada.
The following post on the Canadian Class Actions Monitor blog may be of interest to readers of this blog: Ontario Court of Appeal Turns Against Cross-Border Securities Class Actions.
In the recent decision of Kaynes v. BP, PLC, 2014 ONCA 580, the Ontario Court of Appeal stayed a proposed secondary market securities class action on the basis of forum non conveniens. Writing for a unanimous Court of Appeal, Sharpe J.A. found that Ontario could assume jurisdiction over claims by Canadian residents who purchased their shares on foreign exchanges. Nevertheless, he held that Ontario should decline jurisdiction on … Continue Reading
The Supreme Court of Canada has granted leave to appeal in a case that will determine how to apply the statutory limitation period for investors in Ontario who decide to sue public issuers and their executives under the Securities Act. Given similar legislation in other provinces, the case will be significant for investors and public issuers across Canada.… Continue Reading
The business judgment of directors setting executive compensation was front and centre in the Ontario Court of Appeal’s recent decision in Unique Broadband Systems, Inc. (Re), 2014 ONCA 538 (UBS). Although the decision is based on unique underlying facts, it offers several important lessons on corporate governance.
The following post on the Canadian Securities Regulatory Monitor blog may be of interest to readers of this blog: Deemed Reliance in the U.S. Supreme Court.
On June 23, 2014 the United States Supreme Court issued its much-anticipated decision in Halliburton Co. v. Erica P. John Fund (“Halliburton”), as issuers and investors in the U.S. (and Canada) wanted to see if the landscape for securities class actions in both countries would be fundamentally changed. The U.S. Supreme Court made only an uneventful change in U.S. law and so our Courts are not likely to see a sudden shift of … Continue Reading
Everyone has been talking about the recent decision from the US Supreme Court in Halliburton Co v Erica P. John Fund Inc (Halliburton) and its rulings regarding the “fraud on the market” doctrine in US securities class action litigation (previously reported on here and here). In Canada, many are likely wondering about the potential impact of the decision here. However, what this case shows is a deepening divide between the certification process of such actions in the US and Canada. In the US, the process is becoming more difficult for investors, while Canada remains a very pro-certification … Continue Reading
The British Columbia Court of Appeal recently released a helpful decision applying principles of discoverability to determine when a limitation period begins to run. In Roberts v. E. Sands & Associates Inc., 2014 BCCA 122, the Court rejected 650 claims against a bankrupt investment firm on the basis that these claims were made after the six-month limitation period under the Securities Act had expired.
In so doing, the Court sent a clear message to potential claimants: a limitation period will start to run when the known facts suggest the pursuit of an investigation into a cause of action … Continue Reading
On February 11, 2014, the Quebec Court of Appeal rendered its judgment in Succession Huppé c. Valeurs mobilières Banque Laurentienne, 2014 QCCA 294 confirming a judgment of the Superior Court which had rejected an investor’s claim against his investment advisor and the latter’s brokerage firm because the investor had waited too long before denouncing the renegade.
Mr. Huppé was a Hydro-Québec retiree. At the beginning of December 1999, he entrusted a portfolio worth some $319,222 to one Mr. Duplessis of Valeurs Mobilières Banque Laurentienne (VMBL), whom he authorized to effect securities transactions in his name with the account which Mr. … Continue Reading
On February 20, 2014, the Supreme Court of Canada granted leave to appeal from the first decision from the Québec Court of Appeal on the statutory secondary market liability regime adopted in 2007, pursuant to a reform of the Quebec Securities Act, R.S.Q. c. V-1.1 (“QSA”).
Under the QSA, Theratechnologies inc. (“Thera”) is a reporting issuer which must comply with continuous disclosure obligations. In 2009, Thera filed an application to the Food and Drug Administration (“FDA”) to commercialize a major drug called Tesamoreline. In the course of the approval process, on May 25, 2010, the FDA … Continue Reading
The Ontario Court of Appeal’s decision in Green represents yet another plaintiff-friendly class action development from the Canadian courts, this time in the context of limitation periods. Less than two years after its watershed decision in Timminco, Ontario’s highest court reversed itself and in a decision authored by Feldman J.A. re-cast the limitation period regime governing secondary market civil liability under the Ontario Securities Act. In Green v. CIBC, 2014 ONCA 90, a five-member panel of the Court overturned Sharma v. Timminco, 2012 ONCA 107 and gave class action plaintiffs the protection of s. 28… Continue Reading
The Supreme Court of Canada has released what may be the most important administrative law appeal of the year in McLean v. British Columbia (Securities Commission), reaffirming the deference that administrative tribunals are owed when interpreting their “home” or closely related statutes and expressly seeking – as always, it seems – to foster greater “predictability and clarity”. The case represents the Court’s first return to inter-provincial securities regulation issues since the Reference re. Securities Act, 2011 SCC 66.
… Continue Reading
On July 17, 2013, the Quebec Court of Appeal rendered its first decision on the statutory secondary market liability regime adopted in 2007 pursuant to a reform of the Quebec Securities Act (“QSA”). Although the QSA regime facilitates a plaintiff’s burden, it also imposes an authorization process under which a claimant must establish that its action is brought in good faith and has a reasonable possibility of success. In Theratechnologies inc. v. 121851 Canada inc., 2013 QCCA 1256 (“Theratechnologies”), the Court of Appeal upheld the Superior Court’s decision to authorize a claim pursuant to… Continue Reading
In a recent decision, the High Court of Australia adopted an expansive approach to the market manipulation provision in that country’s corporations statute. In particular, the High Court rejected the notion that market manipulation is restricted to the misuse of monopolistic or dominant market power. The High Court instead held that purchasing shares for the sole or dominant purpose of creating or maintaining a specific price amounts to market manipulation, even in the absence of proof that the transaction affected the behaviour of genuine market participants. The High Court’s decision will likely make it easier to prosecute market manipulation… Continue Reading
If disclosure of information has no effect on a company’s share price, was that information really material to investors? A recent Ontario Divisional Court ruling suggests that the answer may be “Yes” if the information is of the kind that a reasonable investor would want to rely on in making an investment decision. In Cornish, the Court considers the test for when a “material change” has occurred and concludes that the market impact test for materiality can be satisfied even if the share price is not impacted following disclosure of the information. The case is an important one about… Continue Reading
The recent U.S. Supreme Court ruling in the Amgen Inc. v. Connecticut Retirement Plans & Trust Funds, No. 11-1085, 2013 WL 691001 (Feb. 27, 2013) (“Amgen”) securities fraud class action is an important milestone in the evolution of the defences to securities disclosure class actions in the U.S., and potentially in Canada. The Court addressed two questions relevant to public issuers: the necessity for plaintiff investors to prove that alleged misrepresentations to the market by companies are material, and that they were relied upon.
The Amgen decision
In this case, an investor brought a securities fraud class … Continue Reading
The US Supreme Court recently handed the US Securities and Exchange Commission (the “SEC”) a very clear message: the act of fraud – not its discovery – triggers the start of the limitation period in government enforcement proceedings.
Chief Justice Roberts’ unanimous decision in Gabelli et al v. Securities and Exchange Commission gave a strict reading to the five-year statutory limitation period for initiating civil penalty proceedings. In so doing, the Court flatly rejected the SEC’s argument that it is only the discovery of fraud which starts the clock ticking.
In Boughner v. Greyhawk, the Ontario Court of Appeal recently considered different methods for determining how to fairly distribute comingled funds remaining from a collapsed Ponzi scheme. The Court affirmed the decision of the lower court which held that, where practical, remaining funds should be allocated according to the lowest intermediate balance rule, whereby funds were to be distributed pro rata on the basis of tracing, which precluded early investors from unfairly benefitting from the contributions of later investors.
Over the course of more than a decade, two dozen investors were duped into believing that the Greyhawk Fund … Continue Reading
The Supreme Court of Canada released one decision this week of interest to Canadian businesses and professions.
In Newfoundland and Labrador v. AbitibiBowater Inc., 2012 SCC 67, the majority of the Court held that environmental protection orders issued under provincial legislation, which required an insolvent company to undertake remediation measures but which were not expressed in monetary terms, nonetheless amounted to “claims” under the Companies’ Creditors Arrangement Act (“CCAA“) that could be stayed and subject to a claims procedure order in the context of CCAA proceedings. The Court observed that not all environmental protection orders will … Continue Reading
The Supreme Court of Canada released one decision this week of interest to Canadian businesses and professions.
In Construction Labour Relations v. Driver Iron Inc., 2012 SCC 65, the Court held the Alberta Court of Appeal erred in quashing a decision of the Alberta Labour Relations Board on judicial review. The Court’s brief judgment criticizes the Court of Appeal for taking an overly rigid approach to the Board’s reasons when finding that the Board failed to consider various issues of statutory interpretation under the Alberta Labour Relations Code.
In a decision released this month, the British Columbia Court of Appeal has declined to enter the national fray on the question of how courts should interpret statutory leave requirements adopted throughout Canada in recent securities legislation amendments. These leave requirements impose a preliminary hurdle for plaintiffs seeking to advance statutory secondary market class action claims, requiring them to demonstrate a reasonable possibility of success at trial. Thus far, no appellate court in Canada has yet pronounced on how courts should apply this standard. In Round v. MacDonald, the motions judge suggested that the appropriate standard in British Columbia … Continue Reading
The Supreme Court of Canada agreed earlier this summer to hear the appeal in Patricia McLean v. Executive Director of the British Columbia Securities Commission, an interesting case that raises several legal issues relevant to provincial securities commissions and the extra-provincial reach of securities litigation. With the Court’s decision last week to dismiss the leave application in Torudag, McLean provides the Court with a unique opportunity to opine on extra-provincial issues in the securities regulation context. The specific issues in McLean deal with the scope of the “public interest” power of securities commissions as it relates to out-of-province… Continue Reading