Securities litigation and enforcement

Key take-aways On September 5 the Court of Appeal for Ontario issued its decision in Lavender v. Miller Bernstein LLP, 2018 ONCA 729. The decision is now the leading judgment by Ontario’s highest court on the duty of care owed by auditors. The Court of Appeal held that an auditor does not owe a duty of care to account holders with a securities dealer simply by virtue of auditing the dealer’s annual registration renewal requirements filed…
On September 5, 2018, the Quebec Court of Appeal rendered a unanimous judgment in Autorité des marchés financiers c. Forget, 2018 QCCA 1419 (Forget) clarifying the essential elements of the mens rea offence of market manipulation set out at section 195.2 of the Quebec Securities Act (QSA): 195.2. Influencing or attempting to influence the market price or the value of securities by means of unfair, improper or fraudulent practices is an offence. and of the…
In Mallat c. Autorité des marchés financiers de France, 2018 QCCS 3867, Cohen J. granted a motion to dismiss an action brought by three Ubisoft executives (Plaintiffs) against the Autorité des marchés financiers de France (AMFF) and the Autorité des marchés financiers du Québec (AMFQ). Among many demands[1], the Plaintiffs requested declarations that the Multilateral Memorandum of Understanding Concerning Consultation and Cooperation and the Exchange of Information (the MMoU) ‑ to which…
In response to the U.S. Supreme Court’s June 21, 2018 decision in Lucia v. SEC, No. 17-130, holding that administrative law judges (ALJs) at the U.S. Securities and Exchange Commission (SEC) had been improperly appointed because they had been appointed by SEC staff rather than the President or the full SEC, which was discussed in our June 27, 2018 blog post, the SEC issued an August 22, 2018 order explaining how it would…
In the recent decision Baazov v. AMF, Mascia J. of the Quebec Court, Criminal and Penal Chamber granted a stay of proceedings in respect of all tipping, insider trading and market manipulation charges laid against the accused based on the repeated failings of the prosecutor, the Autorité des marchés financiers (AMF), the Quebec securities regulator, in its disclosure of evidence to the accused. The AMF has decided not to appeal the judgment, which is now…
In the recent decision of United States Securities and Exchange Commission v. Autorité des marchés financiers, 2018 QCCQ 4417, the Quebec Court, Criminal and Penal Chamber held that the United States Securities and Exchange Commission (SEC) had the required interest under section 122 of the Code of penal procedure (CPP) to be allowed to examine materials seized by the Autorité des marchés financiers (AMF), the Quebec securities regulator, from persons under investigation. The CPP…
Justice Perell’s decision in Fantl v. ivari, teaches class action defendants an important lesson in being careful what they wish for.  In a rare decision, he ordered that a defendant contribute the majority of the costs of providing potential class members with notice of certification. Background When a class action is certified by a court, efforts must be made to notify potential class members of the decision so that they are able to exercise…
In a decision issued on July 24, 2018, the Ontario Securities Commission held that the test to determine whether a respondent’s case should be severed and heard separately is the same test used in criminal proceedings. The decision, Hutchinson (Re), 2018 ONSEC 40, is available here. Allegations of insider trading and insider tipping The OSC commenced proceedings against four individuals alleging insider trading and insider tipping with respect to the securities of eight companies.…
Last month, the U.S. Supreme Court granted certiorari to hear a case where an investment banker copied and pasted misstatements from his boss into emails that, at his boss’s request, he sent to prospective debenture purchasers.  In Lorenzo v. Securities and Exchange Commission, 872 F.3d 578 (D.C. Cir. 2017), a divided United States Court of Appeals for the District of Columbia held that the investment banker was not the “maker” of the misstatements, but nevertheless…
On June 21, 2018, the U.S. Supreme Court ruled that administrative law judges (ALJs) at the U.S. Securities and Exchange Commission (SEC) had been improperly appointed because they qualified as “Officers of the United States” under the “Appointments Clause” of the U.S. Constitution, who under the Constitution may be appointed only by the President, a court of law, or heads of departments.  Lucia v. SEC, No. 17-130.  Because the SEC’s ALJs had been selected…