David Andrew Hausman

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.

In an enforcement proceeding alleging false sales communications regarding ESG factors, the respondent Som Seif brought a motion for further disclosure and particulars.

The Capital Markets Tribunal dismissed the motion for disclosure, finding the requested correspondence with other fund managers and internal Commission documents irrelevant to the allegations.

The Tribunal also declined to order the Commission to produce a privilege log.

The motion for particulars was dismissed after the Commission undertook to clarify which specific statements Seif allegedly reviewed, edited, or provided quotes for, with the Tribunal finding the remaining allegations sufficiently particularized.

At a first case management hearing in an enforcement proceeding, the Capital Markets Tribunal declined to adopt the longer timetable proposed by the Ontario Securities Commission.

Emphasizing the statutory and procedural directives to ensure expeditious proceedings, the adjudicator largely accepted the respondents' proposed schedule and ordered the parties to provide availability for a merits hearing in 2026.

The Capital Markets Tribunal issued its sanctions and costs decision against the respondents following findings of fraud and obstruction of the Commission's investigation.

The Tribunal ordered significant administrative penalties, disgorgement, and permanent market bans against the senior officers for their roles in orchestrating and participating in multiple frauds that diverted over $100 million in investor funds.

The chief compliance officer, who acted under direction and cooperated with the investigation, received a lesser administrative penalty and a 10-year market ban.

The respondents were also ordered to pay a portion of the Commission's costs.

The appellant, a former chairman of a publicly traded cannabis company, appealed decisions of the Capital Markets Tribunal finding he breached the prohibition against tipping material non-public information under s. 76(2) of the Securities Act and imposing sanctions.

The appellant had shared draft transaction documents with a personal friend and business colleague.

The Divisional Court upheld the Tribunal's findings that the appellant bore the onus of proving the disclosure was in the 'necessary course of business' (NCOB), that the NCOB test is purely objective, and that the disclosure was not necessary.

The Court also dismissed the appellant's argument that an objective NCOB test unjustifiably infringed his freedom of expression under s. 2(b) of the Charter, finding any infringement was justified under s. 1.

The appeal against the merits and sanctions decisions was dismissed.

The Ontario Securities Commission alleged that Bridging Finance Inc. and its principals, David and Natasha Sharpe, along with Chief Compliance Officer Andrew Mushore, engaged in multiple frauds and conflicts of interest involving the misappropriation of investor funds.

The Capital Markets Tribunal found that David and Natasha Sharpe perpetrated frauds relating to loans to entities associated with Sean McCoshen, Ninepoint Partners LP, and Gary Ng, diverting millions of dollars for their personal benefit and to facilitate the purchase of Bridging shares.

The Tribunal also found that Mushore participated in the Ninepoint fraud.

Furthermore, the Tribunal concluded that the respondents obstructed the Commission's investigation by making false statements, creating false paper trails, intimidating witnesses, and permitting surreptitious monitoring of a compelled interview.

Bridging was found to have failed to address conflicts of interest, for which the Sharpes were deemed liable as directing minds.

The Ontario Securities Commission sought sanctions and costs against Michael Paul Kraft and Michael Brian Stein following a merits decision that found Kraft engaged in illegal tipping and Stein in insider trading.

The Capital Markets Tribunal ordered market participation bans, administrative penalties, disgorgement, and costs against both respondents.

Kraft was ordered to pay a $200,000 administrative penalty and $150,000 in costs, and was subject to four-year director and officer bans and three-year trading bans.

Stein was ordered to pay a $150,000 administrative penalty, disgorge $29,345, and pay $50,000 in costs, and was subject to three-year director and officer bans and four-year trading bans.

The Tribunal also addressed a preliminary issue regarding the confidentiality of Stein's medical records.

The plaintiffs appealed the dismissal of their motion to certify a class action against several discount brokers regarding the receipt of mutual fund trailing commissions.

The motion judge had found no basis in fact for the core proposed common issue of whether the receipt of such commissions contravened applicable Canadian securities law prior to their explicit prohibition in 2022.

The Divisional Court dismissed the appeal, finding that the motion judge correctly applied the 'some basis in fact' test, properly concluded that all pleaded causes of action relied on the allegation of illegality, and appropriately held the plaintiffs to their strategic concession that the entire action would fail if the core issue was not certified.

Staff of the Ontario Securities Commission alleged that Royal Bank of Canada failed to properly account for costs incurred for internally developed software, in breach of the books and records requirements under s. 19(1) of the Securities Act.

The parties entered into a no-contest settlement agreement wherein Royal Bank agreed to make a voluntary payment of $2,000,000 to the OSC, alongside payments to other regulators.

The Capital Markets Tribunal approved the settlement, finding it fell within a range of reasonable outcomes and was in the public interest, noting Royal Bank's prompt cooperation and proactive corrective measures.

The Ontario Securities Commission (OSC) brought a motion seeking an order for the issuance of Letters of Request in Commissions under section 152 of the Securities Act.

The OSC required evidence from two individuals, one residing in British Columbia and one in Massachusetts, USA, for a proceeding before the Capital Markets Tribunal concerning Bridging Finance Inc. and its respondents.

The respondents did not oppose the motion.

The court granted the order, finding that the proposed witnesses had relevant evidence and that the Letters of Request and Commissions accorded with Rule 34.07(2) of the Rules of Civil Procedure.

The respondent, former Chief Compliance Officer of Bridging Finance Inc., brought a motion for an expedited or separate merits hearing regarding the allegations against him, citing financial constraints.

Staff of the Ontario Securities Commission and other respondents opposed the motion.

The Capital Markets Tribunal dismissed the motion, finding that the allegations against the moving party were inextricably intertwined with those against the other respondents, and that his proposed mechanisms would not result in a just, expeditious, and cost-effective proceeding.

The plaintiffs brought a motion to certify a class action against seven discount brokers, alleging that their receipt of mutual fund trailing commissions prior to the 2022 prohibition was illegal.

The court found that the plaintiffs failed to satisfy the 'some evidence' requirement to show that the practice contravened applicable Canadian securities law.

The evidence filed by the plaintiffs themselves demonstrated that the practice, while controversial, was not illegal before the regulatory amendments took effect.

The motion for certification was dismissed.

The plaintiffs in a class action against Kew Media Group Inc. and several individual defendants sought consent orders to streamline the litigation.

The corporate defendant was in insolvency proceedings with a stay in place.

The plaintiffs agreed to discontinue the action against five individual defendants, hold the case in abeyance against two others, and toll applicable limitation periods.

The court granted the consent orders for discontinuance, leave to proceed under the Securities Act, and certification under the Class Proceedings Act against the remaining individual defendants, finding the agreements made the case more efficient without adversely affecting class members.

Epix Resource Finance Corporation applied for an order under section 127 of the Securities Act against Aberdeen International Inc., alleging Aberdeen failed to comply with obligations applicable to non-redeemable investment funds.

The Commission considered whether Epix should be granted standing to proceed as a private party.

The Commission dismissed the application, finding that Epix failed to demonstrate it was in the public interest to bypass Commission Staff's usual gatekeeper processes and policy-based filtering.

The plaintiffs in a proposed securities class action brought a motion for approval of a third-party Adverse Costs Indemnity and Funding Agreement with Camac Partners LLC.

The agreement provided up to $800,000 in adverse costs indemnity and $125,000 in disbursement funding in exchange for 10% of the net recovery, capped at $4 million.

The defendants did not oppose the motion.

The court approved the agreement, finding its terms fair, reasonable, and necessary to provide access to justice for the plaintiffs and the proposed class.

The defendants, TD Waterhouse Canada Inc. and The Toronto-Dominion Bank, brought a motion to strike several paragraphs from the plaintiff, David G. Durno's, Statement of Claim.

The grounds for the motion were that the disputed claims failed to disclose a reasonable cause of action and constituted an abuse of process or an improper collateral attack on Durno's settlement agreement with the Investment Industry Regulatory Organization of Canada (IIROC) and IIROC's approval decision.

The plaintiff argued that his claims for breach of employment contract were not a collateral attack on the settlement, as he was not relitigating admissions but seeking damages for the defendants' alleged failure to supervise and alert him to regulatory concerns.

The court dismissed the defendants' motion, finding that the disputed claims related to a breach of contract and did not constitute an abuse of process or a collateral attack.

The respondent brought a motion to adjourn the hearing on the merits pending his appeal to the Divisional Court regarding a dismissed motion for a stay based on solicitor-client privilege.

Staff opposed the adjournment, citing its pending motion to quash the appeal.

The Commission found that proceeding with the hearing would not significantly expedite the matter, as the majority of the hearing would occur in September regardless of the outcome of Staff's motion.

The motion to adjourn was granted, and the hearing was rescheduled to September.

The respondent, Benedict Cheng, brought a motion claiming solicitor-client privilege over certain evidence, including memos written by the company's Chief Operating Officer (COO), who was also a licensed lawyer.

The respondent argued that the COO acted as the company's Chief Legal Officer and provided personal legal advice.

The Ontario Securities Commission dismissed the motion, finding that the COO's role was operational, not legal, and that no solicitor-client relationship existed between the COO and the respondent or the company.

Consequently, the communications were not protected by solicitor-client privilege.

Staff of the Ontario Securities Commission issued a Statement of Allegations against the respondents.

Prior to the hearing on the merits, the respondent brought a motion asserting solicitor-client privilege over certain evidence.

Staff brought a cross-motion to defer the privilege issue to the merits hearing, arguing prematurity and questioning whether a non-merits panel had jurisdiction to make pre-hearing evidentiary rulings.

The Commission held that it has jurisdiction to determine pre-hearing evidentiary issues, including privilege, and that doing so promotes efficiency.

Applying the Mega-C factors, the Commission concluded the privilege motion was discrete, necessary for a fair hearing, and not premature.

Staff's cross-motion was dismissed and the privilege motion was ordered to proceed.

The Ontario Securities Commission approved a settlement agreement between Staff and Home Capital Group Inc. (HCG) and three of its former executives.

The respondents admitted to misleading investors by failing to timely disclose the termination of several brokers and brokerages due to falsified loan applications, which caused a decline in mortgage originations.

The settlement included a $10 million payment by HCG for the benefit of a proposed class action, $500,000 in costs, and administrative penalties totaling $2 million against the individual respondents, who were also reprimanded and prohibited from acting as directors or officers of reporting issuers for varying periods.