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Category Archives: Securities

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Insider Trading: Securities Commission to Think Twice About Excessive Sanctions and Speculation

Posted in Case Comments, Securities

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.

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Ontario Court of Appeal Turns Against Cross-Border Securities Class Actions

Posted in Case Comments, Class Actions, Securities

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

Time to Leave: Supreme Court to Determine Securities Class Action Limitation Period

Posted in Case Comments, Class Actions, Securities

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

Pay Me Now: Court of Appeal Delivers Lessons on fiduciary duties, the business judgment rule, and executive compensation

Posted in Case Comments, Corporate Law, Securities

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.

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Deemed Reliance in the U.S. Supreme Court

Posted in Case Comments, Class Actions, Securities

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

Halliburton: Deepening the Divide Between Certification of US and Canadian Securities Class Actions

Posted in Case Comments, Class Actions, Securities

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

A little knowledge is a dangerous thing…because it calls for reasonable diligence

Posted in Case Comments, Securities

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.[1]

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

Beware: When Investors Act Tardily in Denouncing Suspect Movements in their Brokerage Accounts, They Have only Themselves to Blame

Posted in Case Comments, Securities

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

Securities Secondary Market Liability in Quebec To Be Discussed by the Supreme Court of Canada

Posted in Case Comments, Case Previews, Class Actions, Securities

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”).

Material Facts

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 Final Word (Again?) On Limitation Periods for Securities Class Actions

Posted in Case Comments, Class Actions, Securities

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. 28Continue Reading

Correctness is “Fashionable”, But in a Bad Way: SCC broadens scope for administrative tribunals and securities commissions

Posted in Administrative, Case Comments, Securities

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.

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Screening Secondary Market Liability Actions in Quebec: the Court of Appeal Weighs In

Posted in Case Comments, Class Actions, Procedure, Securities

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[1] (“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

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What is Market Manipulation?: The High Court of Australia Weighs In.

Posted in Case Comments, Corporate Law, Securities

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

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Full Disclosure: Share Price Is Not Enough

Posted in Case Comments, Class Actions, Corporate Law, Securities

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

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The Second Opinion: The U.S. Supreme Court Questions Fraud-on-the-Market

A Commentary on Recent Legal Developments by the Opinions Group of McCarthy Tétrault LLP

Posted in Securities, The Second Opinion

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

Clock Starts with the Act of Fraud: U.S. Supreme Court Confirms Five-Year Limitation Period for Government Enforcement Proceedings

Posted in Case Comments, Securities

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.

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The Fairness of Tracing: Ontario Court of Appeal Considers Methods of Distributing Remaining Funds to Victims of a Ponzi Scheme

Posted in Case Comments, Securities

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.

Background

Over the course of more than a decade, two dozen investors were duped into believing that the Greyhawk Fund … Continue Reading

This Week at the SCC (07/12/2012)

Posted in Aboriginal, Bankruptcy and Debt, Corporate Law, Environmental, Labour and Employment, Securities, This Week at the SCC

Cases Decided

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

This Week at the SCC (30/11/2012)

Posted in Bankruptcy and Debt, Intellectual Property, Labour and Employment, Professions, Securities, This Week at the SCC

Cases Decided

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.

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Round and Round We Go: BCCA Declines Opportunity to Shape Leave Test in Secondary Market Class Actions

Posted in Case Comments, Class Actions, Corporate Law, Procedure, Securities, Torts

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

Securities Commissions and the “Public Interest” at the SCC: Court to Rule on Inter-Provincial Reciprocal Orders and Limitation Periods

Posted in Administrative, Case Comments, Procedure, Securities

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

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Hot Off the Press – World Class Actions: A Guide to Group and Representative Actions Around the Globe

Posted in Aboriginal, Class Actions, Communications, Construction and Real Estate, Energy, Financial Services, Franchise and Distribution, Health, Insurance, Media, Municipal, Procedure, Professions, Securities, Transportation

In the newly published World Class Actions: A Guide to Group and Representative Actions Around the Globe, McCarthy Tétrault litigators David Hamer and Shane D’Souza co-authored the “Multijurisdictional and Transnational Class Litigation: Lawsuits Heard ‘Round the World” chapter. The chapter offers guidance to international lawyers who represent clients involved in cross-border, multinational and international class actions.

World Class Actions is a practical guide for lawyers, clients, legal support professionals, academics, policymakers and judges on the procedures available for class, group and representative actions internationally. Each chapter is written by a local attorney familiar with the laws, best practices, legal … Continue Reading

Back to Basic: US Supreme Court to Hear Amgen and Clarify “Fraud-on-the-Market” Reliance Presumption in Class Actions

Posted in Case Previews, Class Actions, Corporate Law, Securities, Torts

The Supreme Court of the United States has announced it will hear the appeal in Amgen Inc. v. Connecticut Retirement Plans and Trust Funds, setting the stage for an important clarification of the use of the “fraud-on-the-market” reliance presumption in U.S. securities class actions. The Court first set out the presumption in its 1988 landmark decision in Basic Inc. v. Levinson, 485 U.S. 224 (1988). The Amgen decision will have an impact in Canada, where courts have grappled with the question of reliance in such cases. Generally, Canadian courts have been sceptical about importing a “fraud-on-the-market” approach, but … Continue Reading

U.S. Supreme Court Refuses to Adopt a Bright-Line Rule on Limitation Periods for Corporate Insider Profit Claims

Posted in Case Comments, Corporate Law, Procedure, Securities

There is little law in Canada regarding if and how limitation periods applicable to statutory causes of actions in securities legislation can be tolled. For many public companies, this can create uncertainty regarding whether investor lawsuits are statute-barred.

For example, the limitation period in s. 138 of the Ontario Securities Act, which covers causes of action brought in respect of misrepresentations in prospectuses, offering memoranda and circulars, is the earlier of 180 days after the plaintiff first had knowledge of the facts giving rise to the cause of action, or three years after the date of the transaction that

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