Janice Wright

The respondents brought a motion mid-way through a merits hearing to permanently stay the enforcement proceeding against them, alleging the Ontario Securities Commission committed an abuse of process by repeatedly withholding relevant documents and misunderstanding its disclosure obligations.

The Capital Markets Tribunal determined it was appropriate to hear the motion before concluding the merits hearing.

On the merits of the motion, the Tribunal found that while the Commission made several errors regarding its disclosure obligations—including failing to disclose English translations of Chinese documents and certain correspondence—its conduct did not amount to an abuse of process warranting a stay.

The Tribunal dismissed the stay motion but ordered the Commission to conduct a further review of its disclosure and produce any additional relevant non-privileged documents, including new or different information obtained during witness preparation.

The Capital Markets Tribunal held a sanctions hearing after finding that the respondent breached a 2004 order permanently banning him from acting as a director or officer of an issuer and from trading in securities for 15 years.

The Tribunal ordered permanent market participation bans, disgorgement of over $3.2 million and US$10.7 million, administrative penalties totaling $1,000,000, and $300,000 in costs.

The Tribunal found the respondent's conduct to be a flagrant and recurrent breach of a Tribunal order, warranting significant specific and general deterrence.

Staff of the Ontario Securities Commission alleged that the respondent breached a 2004 settlement order which permanently banned him from acting as a director or officer of an issuer and banned him from trading in securities for 15 years.

The Tribunal found that the respondent breached the director and officer ban by acting as a director and/or officer of 38 Ontario corporations.

The Tribunal also found that the respondent breached the trading ban by participating in the sale of shares in an Ontario corporation and by participating in several offshore stock secured financings where he acted in furtherance of trades.

The allegation of conduct contrary to the public interest was dismissed as no additional conduct beyond the statutory breaches was identified.

The Capital Markets Tribunal issued its reasons and decision on sanctions and costs following a merits decision that found the respondents engaged in insider trading, tipping, and misleading Staff of the Ontario Securities Commission.

The Tribunal imposed significant market participation bans ranging from 3 to 15 years, administrative penalties totaling $2.95 million, disgorgement of ill-gotten gains totaling over $1.4 million, and costs of approximately $735,000.

The Tribunal emphasized the seriousness of insider trading and tipping, noting that such conduct undermines investor confidence and the integrity of the capital markets.

Staff and the respondents agreed to adjourn the start of a complex insider trading merits hearing to allow Staff to present investigator evidence by affidavit, reducing the number of hearing days required.

The Commission held that while a formal motion for an adjournment was not required in these circumstances, the parties still had to establish 'exceptional circumstances' under Rule 29(1) despite their agreement.

The Commission found that the pandemic and the efficient use of affidavit evidence to eliminate eight days of live testimony constituted exceptional circumstances.

The adjournment was granted.

This appeal concerns the interpretation and application of section 76(5)(e) of the Securities Act regarding insider trading and tipping liability for successive tippees.

The appellants received material non-public information about a takeover bid for Masonite International Corporation through a chain of tippers.

The core issue is whether successive tippees who did not have actual knowledge that their source was in a special relationship with the issuer "ought reasonably to have known" this fact.

The Court of Appeal upheld the Ontario Securities Commission's findings against Miller but reversed the Divisional Court's decision to overturn findings against Cheng, restoring the OSC's liability and sanctions determinations.

The Ontario Securities Commission held a hearing to consider a settlement agreement between Staff and the respondents regarding unregistered trading, illegal distribution, and fraud.

The respondents raised approximately $5.4 million from investors through promissory notes without being registered or filing a prospectus.

They also engaged in deceitful conduct by paying distributions from new investors' funds and misrepresenting the funds' performance.

The panel approved the settlement agreement, noting the respondents' admission of breaching Ontario securities law, their commitment to repay harmed investors, and the inclusion of oversight mechanisms.

The applicant, Franklin Konopaski, sought remedies under sections 207 (winding up) and 248 (oppression) of the Business Corporations Act against his son, Michael Konopaski, and their jointly owned corporations, following an irrevocable breakdown in their business and personal relationship.

The court found that the required trust and confidence between the business partners no longer existed.

The appropriate remedy was an order for Michael to purchase Franklin's interest in their joint enterprise at fair market value, and an equalization of commissions from their investment business for the period of September 2014 to June 2016.

The court determined the valuation date to be June 30, 2016, and rejected the inclusion of Michael's solely owned professional corporations in the joint enterprise valuation, as well as the continued sharing of Michael's CFO salary.

The Ontario Securities Commission issued its decision on sanctions and costs following a merits decision that found the respondents contravened the Securities Act by engaging in insider trading and tipping.

The respondents included a mergers and acquisitions lawyer who instigated the tipping scheme and several investment advisors who traded on and further disseminated the material non-public information.

The Commission imposed 10-year trading bans, permanent or 10-year director and officer bans, and 10-year registration bans for the investment advisors.

The Commission also ordered disgorgement of profits totaling $84,698, administrative penalties totaling $2,150,000, and costs of $500,000 apportioned among the respondents based on their respective culpability and involvement in the proceedings.

The appellants, former mutual fund and exempt market dealers, entered into a settlement agreement with the Mutual Fund Dealers Association (MFDA) regarding regulatory violations.

They subsequently applied to the Ontario Securities Commission to reinstate their registrations as dealing representatives.

The Commission denied the applications, finding the appellants lacked the requisite proficiency and integrity.

On appeal, the appellants argued the Commission unreasonably failed to defer to the MFDA settlement.

The Divisional Court dismissed the appeal, holding that the Commission has sole jurisdiction over registration suitability and the MFDA had made no findings on that issue to which the Commission could defer.

The appellants appealed a decision of the Ontario Securities Commission, arguing that the Commission unreasonably inferred that the appellant had knowledge of a proposed acquisition based on circumstantial evidence.

The Divisional Court dismissed the appeal, finding that the Commission's detailed findings of fact provided clear, convincing, and cogent evidence to support the inference of knowledge.

The standard of review was agreed to be reasonableness, and the court found the Commission's inference to be reasonable and compelling.

An investor sued a discretionary portfolio manager and its representatives for breach of fiduciary duty, negligence, and breach of contract after the manager failed to promptly diversify an inherited, highly concentrated equity portfolio heavily weighted in Nortel, BCE, and TD shares.

The court found the manager knew diversification was the client's objective but failed to implement it or clearly communicate any staged diversification strategy or associated risks.

The court held that maintaining the concentrated portfolio for several months without proper disclosure or client agreement breached the manager’s duties of care and contractual obligations.

However, individual defendants without trading authority were not liable.

Damages were assessed based on a diversified portfolio consistent with the client’s Investment Policy Statement.

Staff of the Ontario Securities Commission alleged that the respondent violated a Cease Trade Order by giving instructions to sell shares in a corporate account over which he had sole trading authority.

The respondent argued that the order's exception permitting trading 'for his own account(s)' allowed trading through a corporate entity.

The Commission rejected this interpretation, finding that the exception did not allow trading through corporate vehicles, even if the respondent was the beneficial owner.

The Commission concluded that the respondent breached the Cease Trade Order and ordered a three-year trading ban, removal of exemptions, and $15,000 in costs.

The appellants appealed an order clarifying a previous judgment regarding interest payable to a dissenting shareholder under s. 185 of the Business Corporations Act.

The motion judge initially ordered interest 'in accordance with section 185' and later clarified that only postjudgment interest would be awarded from the date of judgment.

The Divisional Court dismissed the appeal, finding that the motion judge retained jurisdiction to specify both the rate and the time period for interest, and properly exercised his discretion.

The respondent requested an adjournment of its appeal to retain new counsel after its previous counsel was removed from the record.

The applicants opposed the adjournment, citing a pattern of delay and concerns about the respondent's solvency, and brought a motion to dismiss the appeal.

The Divisional Court granted the adjournment but imposed strict terms, including making the new hearing date peremptory to the respondent, requiring the respondent to post security of $332,675, and ordering the respondent to pay $5,000 in costs thrown away.