The plaintiff sought to certify a class action against the manager of a complex, passively managed exchange-traded fund (ETF) after the fund's value collapsed, causing significant losses to retail investors.
The plaintiff alleged common law negligence for designing and selling a risky product and failing to actively manage it, as well as a statutory claim under s. 130 of the Securities Act for misrepresentations.
The court dismissed the certification motion and the action, finding it plain and obvious that the pleadings disclosed no reasonable cause of action.
The court held that the negligence claim was an unprecedented attempt to recover pure economic loss for a 'shoddy' financial product, and that the statutory claim for ETF trading properly falls under the secondary market liability provisions of Part XXIII.1 (s. 138.3), not the primary market provisions of s. 130.
