The Governor in Council referred the proposed federal Securities Act to the Supreme Court of Canada to determine its constitutional validity.
The proposed Act sought to create a single national securities regulator and a comprehensive federal regime for securities regulation.
The federal government argued the Act was a valid exercise of its general trade and commerce power under s. 91(2) of the Constitution Act, 1867.
The Court applied the General Motors test and concluded that while certain aspects of the securities market are national in scope, the main thrust of the Act was the day-to-day regulation of securities, which falls under provincial jurisdiction over property and civil rights (s. 92(13)).
Consequently, the Court found the proposed Act unconstitutional, though it noted that a cooperative federal-provincial approach remains available.
