The appellants appealed a decision of the Ontario Securities Commission finding they committed securities fraud and misrepresentation by selling nearly $19 million in securities without disclosing a highly critical financial report.
The Commission ordered significant administrative penalties and disgorgement of over $16.5 million.
On appeal, the Divisional Court upheld the Commission's findings, concluding that the failure to disclose the report while continuing to sell securities was objectively dishonest.
The Court also affirmed that reliance is not required for a misrepresentation finding under the Securities Act and that the Commission has broad public interest jurisdiction to order disgorgement of all funds raised through non-compliance, even if not personally retained by the wrongdoers.
