Hannah Kellett

The Ontario Securities Commission sought the appointment of a receiver over the assets of Traders Global Group Inc. and related entities based on allegations of fraud and unregistered securities trading.

The receiver was appointed in January 2024.

More than nineteen months later, the respondents brought a motion to discharge the receiver, and the receiver sought directions regarding disclosure of data to the Commission.

The court found that significant changes in circumstances had occurred since the appointment, including the dismissal of related U.S. proceedings due to misconduct by CFTC staff whose evidence had supported the receivership appointment, the discovery of a Nova Scotia decision that undermined the novelty of the Commission's legal theory, and substantial delay in the investigation without issuance of an Application for Enforcement Proceeding.

The court granted the respondents' alternative request to vary the appointment order, reducing the frozen assets from tens of millions to $10 million in escrow, while retaining the receiver to administer the escrow and act as intermediary for data disclosure.

The court also confirmed the receiver's authority to share non-privileged data with the Commission under the appointment order.

The court found that Empire Steel Inc. breached its sublease with AZZ Galvanizing Canada Limited by overcharging for hydro, contrary to the contractual requirement to pass on only the actual cost of utilities.

Empire’s attempt to justify the overcharges by reference to alternative agreements and a retroactive TMI reconciliation was rejected as lacking credibility and good faith.

The court awarded AZZ $418,876 for hydro overcharges, subject to a $20,000 set-off for outdoor storage, and dismissed all other counterclaims and crossclaims.

The Ontario Securities Commission applied to appoint a receiver over the property of the respondents, who allegedly engaged in a fraudulent foreign exchange trading scheme.

The respondents had collected over USD $310 million in registration fees from customers who believed they were trading in a live market, when in fact they were trading in a simulated environment controlled by the respondents.

The court found a prima facie case of fraud and determined that appointing a receiver was appropriate for the due administration of Ontario securities law to manage and preserve approximately USD $90 million in frozen assets.