Securities Law

The applicant, newly self-represented, sought an adjournment of a long-scheduled merits hearing two weeks before it was to commence.

He argued he needed time to prepare, respond to a parallel injunction hearing, and gather new evidence.

The Capital Markets Tribunal applied the test under subrule 34(1) of its Rules of Procedure, which requires exceptional circumstances to grant an adjournment.

The Tribunal found that the applicant's change in representation, the parallel proceeding, and his desire to adduce new evidence did not constitute exceptional circumstances.

The adjournment motion was dismissed.

The applicant, a reporting issuer subject to a confidential investigation order under s. 11 of the Securities Act, applied under s. 17 for authorization to disclose the investigation to its regulator and auditors.

The applicant sought a broad order covering the existing investigation order, any future related orders, and any additional information required by the regulator or auditor.

The Tribunal granted the application in part, authorizing disclosure of the existing order and any future orders that merely change the investigators, but declined to grant a blanket authorization for unspecified future orders or information due to a lack of precision.

The Ontario Securities Commission brought a motion requesting that the adjudicator recuse herself from the merits panel due to a reasonable apprehension of bias.

The adjudicator had a social relationship with a key witness for the Commission, having previously worked with the witness's spouse and attended their wedding.

The respondents opposed the motion, arguing that the capital markets community is small and such connections are common.

The adjudicator granted the motion and recused herself, finding that a reasonable person would conclude the social relationship could influence her assessment of the witness's credibility.

The Ontario Securities Commission alleged that the respondent breached a 2023 Tribunal order by failing to resign as a director and officer of two corporations for approximately two years.

The Tribunal found that the respondent contravened Ontario securities law by breaching the order.

The Tribunal ordered the respondent to resign from any current director or officer positions, imposed an additional two-year director and officer ban, and ordered the respondent to pay a $6,000 administrative penalty and $4,200 in costs.

The Ontario Securities Commission alleged that the respondent breached a 2023 Tribunal order permanently prohibiting him from acting as a director or officer of any issuer.

The respondent failed to resign from seven issuers for approximately two years, and remained an officer of one issuer at the time of the hearing.

The Tribunal found that the respondent contravened Ontario securities law.

The respondent was ordered to resign from any remaining positions, pay an administrative penalty of $22,000, and pay costs of $7,757.50.

The Ontario Securities Commission alleged that the respondent breached a 2022 Tribunal order banning him from acting as a director or officer of any issuer by failing to resign from two companies, Campbellco and CCC.

The Tribunal dismissed the allegations regarding Campbellco, accepting the respondent's unchallenged evidence that he never consented to be a director or officer of that company.

However, the Tribunal found that the respondent breached the ban regarding CCC, as he mistakenly believed he had resigned in 2016 but remained a director until December 2024.

The Tribunal ordered the respondent to resign from any issuer, imposed a further one-year director and officer ban, an administrative penalty of $3,000, and costs of $3,248.13.

The applicant brought a motion for a partial stay of a Canadian Investment Regulatory Organization (CIRO) disciplinary panel's sanctions decision pending a review application.

The applicant sought to stay his suspension as a registered representative and executive.

Applying the RJR-MacDonald test, the Capital Markets Tribunal found that while there was a serious issue to be tried, the applicant failed to establish that he would suffer irreparable harm if the stay was refused.

The applicant's evidence of potential financial loss and loss of clients was deemed speculative and unconvincing.

The motion for a stay was dismissed.

The Ontario Securities Commission alleged that the respondents, as officers and/or directors of a publicly listed reporting issuer, authorized the company's failure to disclose their receipt of shares and report an acquisition as a related party transaction.

The parties reached settlement agreements wherein the respondents admitted to authorizing the non-compliance and agreed to significant financial penalties, disgorgement, and market bans.

The Capital Markets Tribunal approved the settlements, finding them reasonable, in the public interest, and sufficient for specific and general deterrence.

The applicant and the respondent sought approval of a settlement agreement regarding allegations that the respondent maintained inadequate controls over marketplace participants' confidential order and trade information, contrary to National Instrument 21-101.

The respondent self-identified the issue but initially failed to promptly advise the regulator of the true nature of the problem.

The Tribunal approved the settlement, finding the agreed sanctions—including a $600,000 administrative penalty, $75,000 in costs, a reprimand, and an independent external review—to be within a reasonable range and in the public interest.

The Ontario Securities Commission approved a settlement agreement concerning the respondents' involvement in an 'overtrade' of Bioscrypt Inc. shares.

Paradigm Capital Inc., acting as an agent for a private placement, facilitated secondary market trades for a mutual fund manager who had been solicited for the private placement.

This resulted in shares being sold by persons with knowledge of an undisclosed material fact to persons without such knowledge.

The Commission found this conduct contrary to the public interest, reprimanded the respondents, imposed trading restrictions, and ordered settlement payments and costs.

The Ontario Securities Commission held a hearing regarding a former branch manager at a registered dealer.

The respondent was alleged to have provided inaccurate 'Proof of Funds' letters to a client to facilitate a high-yield investment program.

The letters misrepresented the funds in the accounts, falsely stated funds would be held, and attested to the legitimacy of funds without due diligence.

The respondent did not attend the hearing.

The Commission found the respondent's conduct contrary to the public interest, noting his failure in his gatekeeper role as a registrant and branch manager.

The respondent's registration was terminated for 10 years, he was permanently banned from supervisory roles, reprimanded, and ordered to pay $126,938.50 in costs.

Following a finding that the respondents traded in securities without registration in relation to a high-yield investment program, the Ontario Securities Commission held a sanctions hearing.

The Commission ordered that the corporate respondents cease trading for 15 years, and the individual respondent cease trading for 10 years with carve-outs for personal accounts.

The individual respondent was also banned from acting as a director or officer of an issuer for 15 years, reprimanded, and ordered to pay $150,000 in costs.

The Ontario Securities Commission held a hearing to determine whether the respondents breached section 25(1)(a) of the Securities Act by trading in securities without being registered.

The respondents had accepted approximately US $21 million from investors for a "high yield program" involving bank guarantees and medium-term bank notes.

The Commission found that the high yield program constituted an investment contract and therefore a security under the Act.

The Commission further held that the respondents' actions, including accepting funds and providing proof of funds letters, constituted acts in furtherance of trades.

As the respondents were acting as market intermediaries in Ontario, they were not exempt from registration.

The Commission concluded that the respondents traded in securities without registration contrary to the Act, with a subsequent hearing to determine sanctions.

The Ontario Securities Commission held a hearing to consider a settlement agreement between Staff and the respondent regarding allegations of illegal insider trading.

The respondent admitted to receiving undisclosed material information from a close friend who was a managing director at a securities firm, and using that information to trade in the securities of two reporting issuers, realizing a profit of approximately $1.9 million.

The Commission approved the settlement agreement as being in the public interest, noting the respondent's cooperation with Staff, his agreement to a permanent cease trade order and director/officer ban, a voluntary payment of $1.9 million, and $25,000 in costs.

The applicants brought an application under sections 104 and 127 of the Securities Act regarding an alleged issuer bid by Technovision Systems Inc. The respondents and Commission staff brought preliminary motions to stay or dismiss the application.

The Commission found that the applicant Urquhart had previously litigated the same issues in British Columbia and Ontario courts, where her claims were dismissed or stayed.

The Commission held that section 104 is intended for ongoing bids, not completed ones, and section 127 cannot be used to remedy private harm.

The application was dismissed as frivolous, vexatious, and an abuse of process against Urquhart, and permanently stayed against the other applicants, as the matter was a private dispute properly suited for civil courts.

The applicant, a group retirement plan administrator registered as a mutual fund dealer and portfolio manager, sought an exemption from the requirement to become a member of the Mutual Funds Dealers Association (MFDA).

The applicant argued its business model, which included discretionary trading, was incompatible with MFDA rules and that restructuring would be costly and confusing to clients.

The Commission denied the exemption, emphasizing that investor protection and the benefits of MFDA oversight outweighed the administrative and financial burdens of restructuring.

A temporary exemption was granted to allow the applicant time to apply for MFDA membership.

Staff of the Ontario Securities Commission sought to extend a temporary order suspending the respondent's registration and cease trading his securities pending a hearing on the merits.

The respondent did not oppose the registration suspension but sought to vary the cease trade order to allow trading in NASDAQ and over-the-counter markets.

The Commission found that the existing permissible trading areas covered a substantial proportion of North American securities and declined to expand them.

The temporary order was extended on its existing terms until July 31, 2004, or the commencement of the hearing.

Staff of the Ontario Securities Commission alleged that the respondents engaged in unregistered trading and advising, and distributed securities without a prospectus, in relation to an 'Asset Securitization Management Portfolio' promoted on their website.

The Commission found that the Trading Program was an investment contract and therefore a security.

The Commission held that offering the program on the internet constituted an act in furtherance of a trade, and that the respondents held themselves out as being in the business of advising.

Given the individual respondent's past criminal convictions for fraud and the highly questionable nature of the investment scheme, the Commission ordered permanent cease trade and director/officer bans.

The Staff of the Investment Dealers Association of Canada applied for a hearing and review of a District Council decision regarding a registered representative who traded for a client attempting to manipulate the market price of a security.

The District Council had dismissed the allegation that the respondent facilitated the business of an unregistered entity and imposed a penalty without a fine or disgorgement.

The Ontario Securities Commission found that the District Council misapprehended the evidence of facilitation and the public interest in strong sanctions for willful market manipulation.

The Commission set aside the dismissal, imposed a fine of $128,504.55 (including disgorgement of commissions), and suspended the respondent's approval for seven years.

Dimethaid Research Inc. requested a hearing and review of the Director's decision objecting to the use of prospectus and registration exemptions for a proposed rights offering.

The Director objected because Dimethaid's annual financial statements did not comply with Canadian GAAP, specifically regarding the valuation of the consideration owing for the acquisition of Oxo Chemie AG.

Dimethaid argued that discounting equity was not required by Canadian GAAP and would be confusing.

The Ontario Securities Commission upheld the Director's decision, finding that the transaction was a business combination to be recorded at fair value, and that applying a proper discount to the non-interest bearing future payment obligations was the most appropriate method to determine fair value.