Erin Hoult

Following a merits decision finding that the respondents perpetrated a securities fraud and that Furtado misled the Commission, the Tribunal held a sanctions hearing.

The Tribunal found the misconduct to be very serious, though not the most egregious, as it involved a legitimate business and no registrable activity.

The Tribunal ordered 10-year market participation bans for all respondents, with a carve-out for Furtado's registered plans.

The respondents were ordered to jointly and severally disgorge $22,200,000, representing the amounts obtained from investors less redemptions and the investment of one fully informed investor.

Furtado was ordered to pay an administrative penalty of $1,000,000, and the corporate respondents $200,000 each.

Costs of $638,613.85 were awarded to the Commission.

The appellants appealed a Capital Markets Tribunal decision finding they committed securities fraud by selling cryptocurrency tokens falsely represented as backed by gold bullion and misappropriating investor funds.

On appeal, they argued the Tribunal erred by admitting compelled interview transcripts, finding the tokens were securities, denying an adjournment, and imposing unfit sanctions.

The Divisional Court dismissed the appeal, holding that compelled testimony is admissible in the same regulatory proceeding, the tokens met the test for an investment contract, and the Tribunal's factual findings and sanctions were reasonable and entitled to deference.

The Ontario Securities Commission appealed an order appointing a receiver over Cacoeli Asset Management and related entities pursuant to section 129(1) of the Securities Act.

The appellants argued that the appointment of a receiver requires a strong prima facie case of breaches of the Act.

The Court of Appeal upheld the lower court's decision, holding that the correct evidentiary standard is a serious concern that there have been possible breaches of the Act.

The court found that the OSC had met this standard based on evidence that funds raised from investors for specific projects were diverted to other purposes without investor disclosure or consent.

The Court of Appeal for Ontario dismissed the appellants’ motion for a stay of a receivership order appointing a receiver under section 129 of the Securities Act.

The court found that while there was a serious issue to be tried, the appellants failed to establish irreparable harm and the balance of convenience did not favour a stay.

The decision reviews the background of the receivership, the test for a stay, and the evidence presented, ultimately concluding that the public interest and interests of third parties, including mortgagees, would be harmed by a stay.

The Ontario Securities Commission alleged that Oscar Furtado and his corporate entities defrauded investors in several real estate limited partnerships, traded securities without registration, and made misleading statements to the Commission.

The Capital Markets Tribunal found that Furtado perpetrated a securities fraud in five ways, including failing to disclose his intent to profit from a property acquisition, redeeming units contrary to representations, and misusing assets of other partnerships.

The Tribunal also found that Furtado made misleading statements to the Commission during its investigation.

However, the Tribunal dismissed the allegations that the respondents engaged in the business of trading securities without registration, finding they were raising capital for an underlying real estate business.

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.

Following a merits decision finding the respondents engaged in a massive crypto asset fraud involving the sale of tokens falsely represented as backed by gold, the Capital Markets Tribunal held a sanctions hearing.

The Tribunal ordered permanent market participation bans, administrative penalties totaling $4.5 million, and disgorgement of over US $51 million in misappropriated investor funds.

The Tribunal declined to order disgorgement of profits from real estate sales due to a lack of causal link.

Costs of $667,605.27 were awarded to the Commission.

The Ontario Securities Commission alleged that the respondents engaged in unregistered trading, illegal distribution, and fraud in relation to the sale of crypto tokens (Unity Ingot and Dignity tokens).

The Capital Markets Tribunal found that the sale of the tokens constituted investment contracts and therefore securities.

The Tribunal concluded that the respondents acted fraudulently by falsely representing that the tokens were backed by gold and by misappropriating investor funds for personal and unrelated corporate use.

The Tribunal also found that the respondents engaged in the business of trading securities without registration and distributed securities without a prospectus.

Hogg was deemed liable for the breaches of Arbitrade Bermuda.

The applicant sought a review of sanctions imposed by the Canadian Investment Regulatory Organization (CIRO) after the Capital Markets Tribunal previously set aside one finding of misappropriation.

The applicant sought to introduce new affidavit evidence regarding his ability to pay and the remaining misappropriation finding.

The Tribunal declined to admit the new evidence, finding it was not new or compelling and amounted to an inappropriate collateral challenge.

The Tribunal reduced the fine for misappropriation from $50,000 to $40,000 to reflect the set-aside finding, but upheld the remaining sanctions, including a permanent ban and $25,000 in costs, noting the severity of the remaining misconduct.

The applicant, Oscar Furtado, brought a motion to adjourn the merits hearing due to ongoing health issues, supported by an independent medical examination from a psychiatrist.

Staff of the Ontario Securities Commission did not oppose the adjournment.

The Capital Markets Tribunal found that the medical evidence established exceptional circumstances, as the applicant required time to stabilize and meaningfully participate in the hearing.

The Tribunal granted the adjournment to July 2024.

The Tribunal also ordered that specific portions of the medical report detailing symptoms and diagnosis be redacted to protect the applicant's privacy, while general context and conclusions remain public.

The moving party requested that the Tribunal reconsider its prior reasons and order to redact additional personal medical information, arguing that the redactions were inconsistent.

Staff opposed the request, arguing that the Tribunal lacked the authority to reconsider its decision via a letter request.

The Tribunal agreed with Staff, finding that it did not have the authority to reconsider its decision.

However, pursuant to section 21.1 of the Statutory Powers Procedure Act, the Tribunal corrected a typographical error regarding the spelling of the moving party's primary care physician.

The Canadian Investment Regulatory Organization (CIRO) brought confidential applications for authorization under s. 17 of the Securities Act to disclose information obtained pursuant to s. 11 investigation orders.

CIRO intended to use the compelled banking records in a regulatory proceeding against a registrant, both to make required disclosure and as evidence.

The Capital Markets Tribunal dismissed the applications, finding that under s. 16(2) of the Act, CIRO does not require a s. 17 order to use the compelled documents for its own regulatory purposes in its own proceeding.

The respondent, Oscar Furtado, brought a motion to adjourn the merits hearing indefinitely due to serious physical and mental health issues.

He also requested that the motion be heard in confidence and that documents containing his personal health information be sealed.

The Capital Markets Tribunal found that Furtado's health constituted exceptional circumstances warranting an adjournment, but declined to grant an indefinite delay, rescheduling the hearing to November 2023.

Applying the Sherman Estate test, the Tribunal ordered that specific details regarding Furtado's symptoms, diagnosis, and treatment be redacted from the adjudicative record and hearing transcript to protect his personal dignity, while maintaining the public's right to know how his health issues affected his ability to participate.

The applicant, a former registered representative, applied for a hearing and review of CIRO decisions finding he misappropriated client funds, effected unauthorized trades, and failed to cooperate with an investigation.

The applicant, who was self-represented, argued he was denied procedural fairness due to his health and that the findings were incorrect.

The Capital Markets Tribunal dismissed most of the application, finding the CIRO panel did not err in denying an adjournment or proceeding with a two-member panel.

However, the Tribunal set aside the finding that the applicant misappropriated funds from two specific clients, concluding the CIRO panel overlooked material documentary evidence (a promissory note and a complaint letter) supporting the applicant's claim that the funds were a personal loan.

The matter regarding those two clients was remitted to CIRO Staff to decide whether to rehear the allegation.

Staff of the Ontario Securities Commission brought a motion for a further and better witness summary from the respondent, Oscar Furtado.

Furtado had provided an amended witness summary stating he would testify generally in accordance with his compelled interview transcripts and refer to documents in Staff's disclosure.

The Capital Markets Tribunal found the amended witness summary deficient under Rule 27(3) of the Tribunal's Rules of Procedure.

The Tribunal held that stating the witness would testify 'generally in accordance with' transcripts created ambiguity about the scope of evidence, failing to disclose its substance.

Furthermore, the broad reference to Staff's disclosure did not sufficiently identify the documents to be referred to.

The Tribunal ordered Furtado to deliver a further and better witness summary.

The appellants appealed a Capital Markets Tribunal decision finding that their business of trading in Contracts for Difference (CFDs) constituted trading and advising in unregistered securities.

The appellants argued that the CFDs were not 'investment contracts' because the CFD providers were counterparties and did not share in profits or losses, thus failing the 'common enterprise' component of the legal test.

The Divisional Court dismissed the appeal, holding that the Tribunal correctly applied a flexible approach to the investment contract test and made no palpable or overriding error in finding that the investors were dependent on the CFD providers, thereby establishing a common enterprise.

The appellant appealed a decision of the Ontario Securities Commission (OSC) that dismissed a review of two decisions by the Investment Industry Regulatory Organization of Canada (IIROC).

IIROC had found the appellant liable for improperly altering client documents after they were signed, imposing a 12-month suspension, close supervision, and fines.

The Divisional Court dismissed the appeal, finding that the OSC applied the correct standard of review and made no palpable and overriding errors in upholding IIROC's findings of fact and sanctions.

The applicant brought a motion for a stay of two decisions of the Investment Industry Regulatory Organization of Canada (IIROC) pending the disposition of his application for a hearing and review.

The applicant also requested that his oral testimony at the stay motion hearing be kept confidential.

The Tribunal applied the three-part test for a stay and 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 not granted.

The Tribunal dismissed the stay motion.

Regarding the confidentiality request, the Tribunal applied the open court principle and found that only limited portions of the transcript containing sensitive health and personal information should be redacted to prevent an affront to the applicant's personal dignity.

The applicant, who was examined as a witness in an OSC investigation, sought an order under s. 17 of the Securities Act authorizing him to disclose his compelled testimony in a U.S. court proceeding.

OSC Staff opposed the application, arguing that the Ontario Superior Court of Justice had jurisdiction over the U.S. court's letter of request and that the Tribunal should decline to exercise its jurisdiction.

The Tribunal found that it was in the public interest to grant the requested relief, as the proposed disclosure advanced the foreign regulatory proceeding resulting from the investigation, and the Ontario Court's involvement did not displace the Tribunal's statutory jurisdiction.

The applicant applied to the Capital Markets Tribunal for authorization under s. 17 of the Securities Act to disclose information from a compelled examination in a U.S. court proceeding.

The respondent argued that the Ontario Superior Court of Justice, which had recognized a letter of request from the U.S. court, had exclusive jurisdiction over the matter.

The Tribunal determined as a preliminary issue that its statutory jurisdiction to grant a s. 17 order was not displaced by the Ontario Court's order, as the requested relief sought to remove a legal impediment under Ontario law rather than interfere with the court's order.