Administrative Law - OCMT

The respondent entered into a settlement agreement with the Alberta Securities Commission, admitting to acting as an unregistered adviser and making misleading statements regarding the sale of securities.

Staff of the Ontario Securities Commission sought an inter-jurisdictional enforcement order under s. 127(10) of the Securities Act.

The Commission found that the statutory threshold was met and that it was in the public interest to issue a reciprocal order.

The respondent was prohibited from becoming or acting as a registrant in Ontario until February 15, 2029, mirroring the non-monetary sanctions imposed in Alberta.

The Applicants sought a hearing and review of a decision by the Director of the Ontario Securities Commission refusing to issue a receipt for The Bitcoin Fund's prospectus.

The Director had refused the receipt on the grounds that bitcoin is an illiquid asset under NI 81-102 and that issuing the receipt was not in the public interest due to concerns about valuation, safeguarding of assets, and auditability.

The Commission set aside the Director's decision, finding that Staff failed to prove bitcoin is an illiquid asset given the evidence of substantial trading volumes on regulated exchanges.

The Commission also found that the Applicants had taken reasonable steps to mitigate operational risks through the fund's static buy-and-hold structure, the use of a regulated index for valuation, and the engagement of professional custodians and auditors.

The Director was ordered to issue a receipt for the prospectus.

Staff of the Ontario Securities Commission applied to revoke a confidentiality order made during a privilege motion brought by the respondent.

The panel had previously dismissed the privilege motion, finding that solicitor-client privilege did not apply.

As privilege was the sole basis for the confidentiality order, and the respondent did not oppose the application, the Commission found it would not be prejudicial to the public interest to revoke the order.

The application was granted, and the exhibits, submissions, and transcripts from the privilege motion were ordered to be made public.

Staff of the Ontario Securities Commission sought an inter-jurisdictional enforcement order under s. 127(10) of the Securities Act against the respondents, following an order by the Nova Scotia Securities Commission (NSSC).

The NSSC had found that the respondents engaged in unregistered trading, illegal distribution of securities, and unfair practices.

The Commission found that the threshold under s. 127(10) was met and that it was in the public interest to issue a protective order under s. 127(1).

The Commission issued an order substantially similar to the NSSC order, with an additional prohibition against trading derivatives to protect Ontario investors.

The respondent brought a motion to halt a section 127 enforcement proceeding, alleging that the Ontario Securities Commission lacked jurisdiction due to institutional bias.

The respondent argued that the Commission's overlapping functions as policy-makers, adjudicators, and board members, particularly regarding the allocation of funds received from a prior settlement agreement, created a reasonable apprehension of bias.

The Commission dismissed the motion, finding that the overlapping functions were statutorily authorized by the Securities Act and did not go beyond what was permitted.

The Commission also found no evidence to overcome the presumption of impartiality or to justify interfering with Staff's discretion in choosing the venue for enforcement.

Staff of the Ontario Securities Commission sought an inter-jurisdictional enforcement order under subsection 127(10) of the Securities Act reciprocating sanctions imposed by the British Columbia Securities Commission (BCSC).

The BCSC had found that the respondents perpetrated a fraud and imposed permanent and long-term market bans.

The Commission found that the statutory test was met and that it was in the public interest to issue an order substantially replicating the BCSC's non-monetary sanctions to protect Ontario investors.

The Ontario Securities Commission approved a settlement agreement between Staff and The Toronto-Dominion Bank regarding allegations of supervisory inadequacies in TD's foreign exchange trading business from 2011 to 2013.

Staff alleged that TD failed to promote a culture of compliance, allowing traders to inappropriately share confidential customer information with competitors.

TD acknowledged the conduct and agreed to a voluntary payment of $9,300,900 and $800,000 in costs.

The Commission found the settlement to be in the public interest, noting TD's significant remediation efforts and exemplary cooperation.

The Ontario Securities Commission approved a settlement agreement between Staff and Royal Bank of Canada (RBC) regarding allegations of supervisory inadequacies in RBC's foreign exchange (FX) trading business from 2011 to 2013.

Staff alleged that RBC failed to promote a culture of compliance, allowing FX traders to inappropriately share confidential customer information with competitors in electronic chat rooms.

RBC acknowledged the conduct was contrary to the public interest, engaged in significant remediation efforts, and agreed to make a voluntary payment of $13,552,000 and pay $800,000 in costs.

The Commission found the settlement to be in the public interest.

The Ontario Securities Commission approved a no-contest settlement agreement between Staff and International Capital Markets Pty.

Ltd. (ICM), an Australian over-the-counter derivatives issuer.

Staff alleged that ICM breached the registration and prospectus requirements of the Securities Act by opening accounts for Ontario investors to trade contracts for differences without being registered or filing a prospectus.

ICM agreed to cease doing business in Ontario, return funds to investors, and pay US$4 million reflecting revenue generated, plus C$650,000 to advance the Commission's mandate and C$25,000 in costs.

The Commission found the settlement to be in the public interest given ICM's exemplary cooperation and the inadvertent nature of the misconduct.

The Ontario Securities Commission approved a settlement agreement with CoinLaunch Corp., an unregistered crypto-asset service provider.

CoinLaunch admitted to engaging in the business of trading in securities without registration by marketing and promoting two security token offerings (BCZERO and ECOREAL).

The Commission found the tokens constituted investment contracts.

The settlement included a $30,000 administrative penalty, disgorgement of $12,233.06, $10,000 in costs, and a five-year ban on trading or acquiring securities.

Staff of the Commission and Caldwell Investment Management Ltd. (CIM) jointly submitted a settlement agreement for approval.

CIM admitted to failing to meet its best execution obligations over a four-year period by directing trades to a related firm, resulting in higher commission rates and bond spreads for its clients.

CIM also admitted to making misleading statements, having inadequate policies, and providing insufficient information to its Independent Review Committees.

The Commission approved the settlement, which included an administrative penalty of $1.8 million, costs of $250,000, and terms and conditions on CIM's registration requiring an independent consultant to review its policies.

The applicant sought a hearing and review of an IIROC hearing panel's decisions on merits and sanctions.

The IIROC panel had found that the applicant engaged in personal financial dealings with a client and made false and misleading representations to his firm, resulting in a two-year suspension, fines, and disgorgement.

The Commission dismissed the application, finding that while the IIROC panel erred in its analysis of the transition rules regarding a repealed rule, the rule remained applicable to the applicant's conduct.

The Commission found no other errors of law or incorrect principles in the IIROC panel's findings of fact, its conclusion that the applicant's statements were false and misleading, or its sanctions order.

Staff of the Ontario Securities Commission alleged that the respondents engaged in unregistered trading, illegal distribution, and fraud in relation to the sale of shares in Natural Bee Works Apiaries Inc. The Commission found that the respondents made fraudulent misrepresentations to investors, including false claims about an imminent NASDAQ listing, a $200 million line of credit, and substantial assets.

The respondents also misused investor funds for personal expenses.

The Commission concluded that all respondents committed fraud, and that Ms. Chickalo and the company engaged in unregistered trading and illegal distribution.

The Commission declined to make separate findings for misleading statements and prohibited listing representations to avoid overlapping contraventions.

Staff of the Ontario Securities Commission sought an inter-jurisdictional enforcement order against the respondent under s. 127(10) of the Securities Act, based on a decision of the British Columbia Securities Commission.

The BCSC had found that the respondent engaged in unregistered advising, made misrepresentations, and perpetrated a fraud, resulting in massive harm to investors.

The OSC found that it was in the public interest to issue a reciprocal order to protect Ontario capital markets.

The OSC permanently prohibited the respondent from trading in securities, acquiring securities, and acting as a director, officer, registrant, or promoter.

In an enforcement proceeding against BDO Canada LLP for alleged failures to comply with generally accepted auditing standards (GAAS) during its audits of Crystal Wealth Management Systems Limited, BDO brought a motion seeking further disclosure from Staff of the Ontario Securities Commission.

BDO sought disclosure of files relating to compliance reviews of Crystal Wealth conducted by OSC and BCSC Staff, as well as documents pre-dating January 1, 2012.

The Commission dismissed the motion, finding that the compliance reviews were not relevant to the allegations against BDO, as they served a different purpose and were not connected to BDO's compliance with GAAS.

The Commission also found no basis to require disclosure of documents older than three years before the impugned audits.

Staff of the Ontario Securities Commission sought an inter-jurisdictional enforcement order against the respondent under subsections 127(1) and 127(10) of the Securities Act.

The respondent had previously pleaded guilty to five counts of fraud over $5,000 under the Criminal Code for misappropriating investor funds intended for a biofuel venture.

The Commission found that the criminal convictions arose from a course of conduct related to securities.

Concluding that a permanent ban was necessary to protect investors, the Commission ordered permanent market bans against the respondent, subject to a limited carve-out allowing him to trade in certain registered and tax-free savings accounts.

The respondent in an Ontario Securities Commission proceeding brought a motion to strike certain paragraphs of an affidavit and factum filed by Staff on an upcoming jurisdiction motion, arguing the paragraphs were irrelevant.

The Commission dismissed the motion to strike, holding that Rule 25.11 of the Rules of Civil Procedure provides an appropriate guideline for striking evidence in Commission proceedings, and that irrelevance alone is insufficient to warrant striking evidence on a preliminary motion.

The relevance of the impugned evidence is best determined by the panel hearing the main motion after the evidence develops in cross-examination.

Mangrove Partners applied for a joint hearing before the Alberta Securities Commission (ASC) and the Ontario Securities Commission (OSC) regarding a proposed transaction between TransAlta Corporation and Brookfield.

TransAlta brought a motion arguing the OSC should decline to hear the application due to an insufficient nexus with Ontario.

The OSC found that while it had jurisdiction, there were no compelling circumstances to warrant exercising it concurrently with the ASC, which was the principal regulator and had stronger connections to the dispute.

The OSC declined to exercise its jurisdiction to hear the application.

Staff of the Ontario Securities Commission sought to extend a temporary cease trade order against the respondents.

Staff requested the extension as part of a Statement of Allegations in a separate proceeding rather than by filing a motion in the existing proceeding as required by the Rules of Procedure.

The Commission waived the procedural requirement under Rule 3, noting that the respondents had notice of the request and did not appear.

The temporary cease trade order was extended until the conclusion of the merits hearing.

The Ontario Securities Commission approved a settlement agreement between Staff and Martin Bernholtz, a former director of Titan Medical Inc. Bernholtz admitted to selling shares of Titan while in possession of material non-public information regarding imminent public offerings, contrary to the public interest and the company's insider trading policy.

The settlement included a voluntary payment of $225,000, costs of $75,000, and various director and trading bans.