Canada: Regulatory Investigations: Applying "Jarvis" In The Securities Context

1) INTRODUCTION

In R v. Jarvis,¹ the Supreme Court of Canada set out the test for determining when Charter rights are engaged in the context of a regulatory investigation conducted by regulatory officials. Writing for the Court, Iaccobucci and Major JJ. stated that evidence may be validly compelled using statutory inquiry or inspection² powers as long as the "predominant purpose" of the inquiry is not "penal liability".³ Once the predominant purpose of the inquiry or inspection is penal liability, an adversarial relationship between the state and the individual crystallizes and the "Rubicon" or "point of no return" has been crossed.⁴ In such instances, the "full panoply" of Charter rights is available to the individual, requiring the regulator to cease using regulatory compulsion powers and to make use of criminal investigative tools, such as search warrants.⁵ Among the Charter rights most often at issue in the case of regulatory investigations are the investigation target's s. 7 right against self-incrimination, when life, liberty or the security of the person is at stake; and the target's s. 8 right against unreasonable search and seizure.

Although the Jarvis decision arose in the context of an audit and subsequent criminal investigation under the Income Tax Act,⁶ the decision has clear implications for other regulatory contexts that employ broad inquiry powers to compel information and regulatory offences that attract penal consequences.⁷ Securities regulation is one such context. In this paper, we compare regulatory enforcement in the income tax and securities contexts and explain why certain aspects of securities enforcement create challenges for applying the Jarvis factors. Drawing from recent cases, we suggest securities context specific factors that courts may add to the Supreme Court's non-exhaustive list of factors. Finally, to assist Enforcement Staff in avoiding the exclusion of evidence, we provide a general protocol for securities regulators operating in a post-Jarvis world, commenting on what implications the proposed Canadian Securities Act may have on securities law enforcement. By way of background, we have first briefly summarized the Supreme Court's decision in Jarvis below.

2) THE SUPREME COURT OF CANADA'S DECISION IN JARVIS

In Jarvis, an auditor from the Canada Customs and Revenue Agency's (CCRA's) Business Audit Section began an audit to follow up on a "lead" that Jarvis had failed to report substantial income from the sale of his deceased wife's artwork for the 1990 and 1991 tax years.⁸ After contacting third party art-galleries and reviewing their books and records,⁹ the auditor found that the lead had some validity and arranged to meet with Jarvis, to interview him and to review his books and records relating to his tax returns.¹⁰ At the interview, Jarvis was not cautioned, nor was he represented by counsel. Jarvis answered the auditor's questions and agreed to provide information about his banking arrangements, as well as receipt books tracking sales and expenses.¹¹ Based on the information obtained after the interview and the review of Jarvis' books and records, the auditor discovered a significant discrepancy in reported income and transferred the file to an investigator in the Special Investigations Section of the CCRA.¹²

After reviewing the auditor's file, the investigator felt there were reasonable grounds to believe that an offence under the Income Tax Act had been committed and obtained a search warrant based on information in the file.¹³ The evidence obtained pursuant to the warrant formed a substantial portion of the Crown's evidence at trial.¹⁴

Jarvis alleged that the auditor began pursuing a criminal investigation after she completed her review of the books and records of the third party art galleries. According to Jarvis, all of the evidence subsequently obtained, including his statements during the interview and the documents he provided in response to the auditor's requests was obtained in violation of his ss. 7 and 8 Charter rights.¹⁵

The Court held that when the "predominant purpose" of an investigation is one of penal liability, an adversarial relationship between the individual taxpayer and the state exists, which triggers the "full panoply" of Charter rights, such as ss. 7 and 8 rights.¹⁶ The "predominant purpose" test is derived from the Supreme Court's decision in Branch v. British Columbia Securities Commission, where the Court upheld the British Columbia Securities Commission's statutory power to compel witnesses to give testimony provided that the "predominant purpose" of the compulsion was not to obtain evidence that would incriminate the witness.¹⁷

The Court's challenge in Jarvis was to determine at what point the adversarial relationship crystallizes, and the predominant purpose of an investigation becomes one of penal liability. Recognizing that the inquiry is contextual and must take into account all relevant factors or the "totality of the circumstances,"¹⁸ the Court listed the following factors for trial judges to consider:

1. Did the authorities have reasonable grounds to lay charges? Does it appear from the record that a decision to proceed with a criminal investigation could have been made?
2. Was the general conduct of the authorities such that it was consistent with the pursuit of a criminal investigation?
3. Had the auditor transferred his or her files and materials to the investigators?
4. Was the conduct of the auditor such that he or she was effectively acting as an agent for the investigators?
5. Does it appear that the investigators intended to use the auditor as their agent in the collection of evidence?
6. Is the evidence sought relevant to taxpayer liability generally? Or, as is the case with evidence as to the taxpayer's mens rea, is the evidence relevant only to the taxpayer's penal liability?
7. Are there any other circumstances or factors that can lead the trial judge to the conclusion that the compliance audit had in reality become a criminal investigation?¹⁹

Applying these factors to the facts, the Court found that there was no investigation into penal liability before the auditor referred the file over to the Special Investigations Section.²⁰ All evidence obtained prior to that date had been validly obtained and properly formed the basis for the search warrant.

3) JARVIS IN THE SECURITIES CONTEXT

The Court in Jarvis clearly contemplated that its predominant purpose test, and the factors enunciated under it, would have implications for other regulatory contexts beyond that of the Income Tax Act.²¹ In particular, the Court suggested that the mix of factors needed to determine when the predominant purpose of an inquiry is penal liability may vary depending on the nature of the government agency involved and its organizational setting.²² In this section, we explore the application of Jarvis in the securities regulatory setting. First, we compare the tax and securities contexts and explain why certain Jarvis factors do not apply neatly in the securities setting. Second, we summarize the three most significant securities-related cases applying Jarvis. Finally, based on the securities cases applying Jarvis, we suggest other relevant factors judges might add to the list of Jarvis factors in securities cases.

a) Comparing tax and securities enforcement

At one level, the regulatory schemes for collecting income tax and regulating securities share certain similarities. Successful tax collection and securities regulation rely on the honesty and integrity of taxpayers and market participants. Both schemes include remedies, offences and penalties to ensure compliance and to deter wrongful conduct.²³ To supervise and ensure the integrity of the regulatory scheme, both rely on broad inquiry powers.²⁴ Finally, In light of their regulatory nature, under both schemes, there is a relatively low expectation of privacy for information or records; in the case of the taxpayer, in records that might be relevant to the preparation of tax returns,²⁵ and in the case of the market participant, in premises or documents that are used or produced in the course of regulated activities.²⁶

In spite of these similarities, there are three principal differences between the enforcement of the income tax and securities regimes that make the list of factors enunciated in Jarvis difficult to apply in the securities context. First, the Enforcement Divisions of securities regulators are organized differently than enforcement at the CCRA. Unlike at the CCRA, with its distinct audit and investigations sections, most provincial securities regulators do not delineate between the responsibilities of those who conduct inquiries to verify compliance with securities laws and those who investigate violations or offences.²⁷ For example, in the Ontario Securities Commission's (OSC's) Enforcement Branch there is a Surveillance Unit and an Investigations Unit but there is no exclusivity in either unit with respect to what will be the procedural outcome.²⁸ As Sparrow J. noted in Maitland Capital, "an analysis of the issue of when 'the Rubicon is crossed' in cases involving Securities Act violations is even less clear than it is in income tax prosecutions, given that there is no special investigations unit which addresses suspected criminal conduct."²⁹

Second, the remedies under the Income Tax Act and provincial securities legislation are different. Under the Income Tax Act, there are specific penalties for specific breaches of the Act, as well as a quasi-criminal or strict liability offence for failing to file a return or breaching other provisions of the Act in s. 238 and specific offences that may be prosecuted by way of summary conviction or indictment in s. 239. By contrast, under provincial securities acts, the same conduct or actus reus may be prosecuted, at the discretion of the regulator, by way of an administrative proceeding before the regulator or by way of a quasi-criminal proceeding in the courts.³⁰

Third, the offences under s. 239 of the Income Tax Act, the provision at issue in Jarvis, contain mens rea elements, whereas in general, neither avenue of administrative or quasi-criminal enforcement under provincial securities acts contains mens rea elements.³¹ Quasi-criminal offences under provincial securities acts are strict liability offences that make it an offence to violate securities laws or to make statements to the regulator, or in securities filings, that are untrue or misleading in a material respect.³² The securities related offences in the Criminal Code do contain mens rea elements. As a result, there are rare instances where provincial securities may inquire into a matter that is ultimately transferred to the provincial Attorney General for prosecution.³³ For the most part, however, securities matters proceed administratively and occasionally, quasi-criminally.³⁴

In light of these differences, certain of the Jarvis factors do not translate easily to the securities context. For instance, factors (c), (d) and (e) – relating to the relationship between an auditor and an investigator – do not fit in the typical securities context in light of the organizational differences between the CCRA and the OSC's Enforcement Branch. As Justice Shamai noted in Landen, "Factors 3, 4, and 6 present an awkward fit here, as all relevant members of the Enforcement Branch are 'investigators' or 'managers'. Whether they are in the Surveillance Unit or the Investigation Unit is not determinative of the character of the work."³⁵ Unlike under the Income Tax Act, a transfer from one unit to another within the OSC's Enforcement Branch does not predict the procedural route the matter will take.³⁶ Similarly, factor (f) (relating to the seeking of evidence of culpability, generally, as compared to evidence of mens rea), does not apply in the securities context, where the same elements may be demonstrated for either administrative or quasi-criminal enforcement and usually, there is no mens rea element.³⁷

b) Securities cases applying Jarvis

There are three principal cases involving inquiries under provincial securities acts that have resulted in regulatory prosecutions where Jarvis has been applied. Brief summaries of these cases illustrate some of the differences between tax and securities enforcement outlined above.

In R. v. Mercer, an accountant was appointed by the Newfoundland Minister of Justice to look into a trust company's finances. At the same time, the Director of Public Prosecutions (DPP) notified the RCMP that an accountant's inquiry was being conducted because there were suspicions that a company might have engaged in fraudulent transactions and the RCMP might be asked to follow up.³⁸ Using powers to seize and copy records under the Newfoundland Securities Act,³⁹ the accountant reviewed the company's information, questioned one of the company's officers and submitted a report to the Department of Justice.⁴⁰ The Deputy Minister of Justice provided the report to the DPP and, after an RCMP investigation, fraud charges were laid. At trial, the defendants sought to exclude the auditor's report and the evidence on which it was based, alleging that improper use of the requirement powers under the Securities Act had been made in order to further a criminal investigation.⁴¹ The trial judge agreed and excluded the evidence⁴² but was reversed on appeal. According to the Court of Appeal, Jarvis does not prevent simultaneous audits and investigations, nor does it require that "there be a fire wall between the two."⁴³ It does prohibit, using the audit process, "either directly or surreptitiously, to obtain information to support a criminal investigation".⁴⁴ The Court held that information obtained during the audit could be transferred to the RCMP and used in the later criminal proceedings because at the time it was collected, there was no evidence that it was obtained for the purpose of aiding the criminal investigation.⁴⁵

In R. v. Landen, the Commission des valeurs mobilieres du Quebec (CVMQ) forwarded an investigation report to the OSC's Director of Enforcement regarding suspected insider trading in a mining company's options by the company's Vice President and Corporate Secretary (Landen) and his broker (Diamond).⁴⁶ An OSC investigator in the Surveillance Unit of the Enforcement Branch obtained a production order under s. 19(3) of the Ontario Securities Act to obtain documents from TD Waterhouse relating to Landen and Diamond.⁴⁷ The investigator also requested a chronology of events from the company and issued three further orders to compel production of records on Landen accounts and those of related parties. At some point, the investigation moved from the Surveillance Unit to the Investigations Unit of the Enforcement Branch, although there was no documentation of the decision making process leading to the transfer.⁴⁸ The lead investigator in the Investigations Unit testified as to his belief that a decision was made to pursue the matter criminally "at the commencement of the investigation".⁴⁹ The second investigator did not agree that a decision had been made to pursue the matter criminally, and she continued to obtain orders to compel the production of records.⁵⁰

The defendants sought orders to exclude all of the evidence obtained from third parties under the s. 19(3) orders, alleging that their ss. 7 and 8 rights were infringed because the OSC's predominant purpose had been penal liability from the beginning of its inquiry.⁵¹ The Court largely agreed. Applying the Jarvis factors, the Court found that there was sufficient evidence as of early 2004, shortly after the company's chronology had been received, that the investigation could be characterized as having the predominant purpose of seeking penal liability.⁵² The Court was persuaded by the fact that a decision to proceed criminally could have been made as early as January 2004; the fact that the OSC appeared to have been careless as to the purpose of its investigation and the potential consequences the purpose would have for collecting information; and the regulatory climate at the OSC, which urged tough enforcement and higher penalties for insider trading offences.⁵³ Accordingly, the Court held that the s. 19(3) production orders issued to third parties after January 2004, violated Landen and Diamond's rights to privacy. Although many of the records were held by third parties, the court held that financial information is part of the "protected 'biographical core' of personal information in which individuals may wish to assert control as against state access."⁵⁴

In R v. Maitland Capital Ltd., the OSC received an anonymous complaint about the individual accused (Grossman and Ulfan) and their attempts to sell shares in an oil and gas venture (Maitland Energy) without a prospectus, nor an exemption under the Ontario Securities Act.⁵⁵ An investigator in the Case Assessment Unit of the OSC's Enforcement Branch was assigned to conduct a preliminary investigation. Over the course of a month and a half, the investigator requested certain information from Grossman by letter.⁵⁶ Based on Grossman's inadequate responses, and after interviewing several investors on the list she was provided, the investigator transferred the file to the Litigation Department to obtain a temporary cease trade order as it appeared Maitland Capital Ltd. was engaging in an illegal distribution.⁵⁷

The Litigation Department investigator began contacting all investors on the list, and was able to obtain a list of 1213 investors (as compared to the 31 on the list provided by Grossman).⁵⁸ The investigator also issued a summons to Maitland Capital's bank. The banking records showed that investor funds had been transferred to companies unrelated to Maitland Capital.⁵⁹ At that point, the investigator recommended that charges be laid at a meeting with his manager and the Director of Enforcement. After the information was sworn, the investigator issued a summons to Bell Canada for all Maitland Capital telephone records during the relevant period.⁶⁰

Counsel representing both Maitland Capital and Grossman, argued that all of the documents obtained during the investigation should be excluded since they were obtained using warrantless searches in violation of the defendants' s. 8 rights.⁶¹ The Court disagreed. Its holdings with respect to the different types of documents were as follows:

• Documents provided to the first investigator by Grossman – the majority of this information was either material that Maitland Capital had a duty to report to the Commission, or was duplicated in other testimony, records or exhibits. Certain responses provided by Grossman were not obtained in violation of s. 7 because the investigator's predominant purpose was merely to determine if there had been compliance with the Securities Act.⁶²
• Documents obtained by summons from investor by second investigator – the second investigator was always of the view that until he received the banking records, he was merely investigating the need for a permanent cease trade order. There was no evidence to the contrary. In any event, the list of shareholders was required to be reported to the Commission, and Grossman did not have any expectation of privacy in respect of Maitland Capital's records.⁶³
• Maitland Capital's banking documents – at the time these were requested, the predominant purpose of the investigation was still to determine if there should be a permanent cease trade order. The court also stated that, "as financial information of a business in a heavily regulated industry in which the accused chose to participate, any expectation of privacy in these records was minimal."⁶⁴ The summons, insofar as it constituted a search, was reasonable.
• Telephone Records – These were properly obtained using the summons power under the Provincial Offences Act for the purpose of quasi-criminal proceedings. There was also a minimal expectation of privacy in these records, as they were records showing "how a highly-regulated business was conducted, sought for the purpose of revealing the extent of the operation."⁶⁵

c) Additional factors that may be relevant in the securities context

In light of the differences between the income tax and securities enforcement regimes, courts applying Jarvis in the securities context may wish to consider the following additional factors when determining whether the purpose of an inquiry has become penal liability:

• public pronouncements from the securities regulator regarding enforcement priorities– In Landen, the court was persuaded that the predominant purpose of the OSC's investigation into insider trading was penal liability in part due to the enforcement climate at the OSC, which encouraged actions to deter insider trading by seeking higher penalties. On this factor, the Court considered speeches given by the Chair of the Commission and the Director of the Enforcement Branch's participation in the "Insider Trading Task Force".⁶⁶
• the seriousness of the violation– the greater the seriousness of the violation of securities laws, either in terms of its pervasiveness or the amount of money involved, the more likely penal liability will be pursued. Although this is not necessarily an indicator that an investigation has shifted to become quasi-criminal, the more serious the offence, the more likely the regulator will desire to make an example of the case and pursue greater penalties for the purposes of deterrence. For example, in Maitland Capital, the original purpose of the inquiry was into whether there was justification for a permanent cease trade order but the inquiry shifted to one of penal liability after banking records revealed that $2.8 million in investor funds had been transferred to companies unrelated to the one in which they had been thought to be investing.⁶⁷
• whether the target of the inquiry holds a senior office within the company- the more senior the position held by the target of an inquiry (e.g., an officer or director), the more likely the inquiry may become an investigation for the purpose of penal liability. For example, Landen's senior position may have been a consideration in the OSC's decision to proceed quasi-criminally as he was a Vice President and Corporate Secretary accused of insider trading in options of the company at which he worked.
• whether the actions of Enforcement Staff obscure the decision to proceed quasi-criminally– in Landen, the Court held the fact that the OSC failed to "show vigilance" with respect to Jarvis, nor to document or keep notes of meetings at which the decision to proceed quasi-criminally, against the Commission.⁶⁸
• the participation of other regulatory agencies, especially the police or RCMP– the mere fact that another governmental agency is involved in an inquiry does not necessarily mean that there has been a decision to proceed quasi-criminally but it can be an indicator that the investigation has reached an advanced stage. In Landen, the Court found that at the time the CVMQ transferred the file to the OSC, a substantial part of the evidence on all elements of the offence was already present.⁶⁹ While involving or transferring a file to the police or the RCMP is a strong indicator that there has been a decision to proceed criminally, mere discussions with police forces or speculation that they might become involved at a later date does not.⁷⁰

4) PROTOCOL FOR COMPLYING WITH JARVIS IN THE SECURITIES CONTEXT

Applying Jarvis in regulatory contexts involving strict liability offences can pose additional challenges aside from the difficulty in applying some of the Jarvis factors. Two aspects of the securities context that pose particular challenges for applying Jarvis from the perspective of Enforcement Staff are: (1) the fact that the same conduct may give rise to administrative and quasi-criminal penalties; and (2) the fact that in securities Enforcement Divisions, regulatory officials often "work on both sides of the Rubicon."

First, a rigorous application of Jarvis to quasi-criminal regulatory offences (and their administrative counterparts), which do not require proof of mens rea, may create confusion about whether the requirement to obtain a warrant has been triggered early on in an investigation. For example, once the authorities have reasonable and probable grounds to believe that the actus reus of the offence has been committed, it may create an impetus to obtain a warrant early on in an inquiry or investigation, even if no decision has been made on how the matter should proceed.⁷¹ The Court in Jarvis clearly did not intend this outcome, as it repeatedly stated that "the mere existence of reasonable grounds that an offence may have occurred is by itself insufficient to support the conclusion that the predominant purpose of an inquiry is the determination of penal liability."⁷²

Second, where Enforcement Staff "work on both sides of the Rubicon," there is a greater likelihood that courts will find that Charter standards apply at an earlier stage in an investigation.⁷³ The effect on Staff who perform overlapping functions is that regulatory functions may be curtailed.⁷⁴ Although the Court in Jarvis states that parallel investigations – one for administrative purposes and one for the predominant purpose of penal liability – are permissible, there may need to be institutional separation between those engaged in each type of activity and limited flow of information between them.⁷⁵

To address the challenges of applying Jarvis in the securities context, in this section, we outline a protocol for how staff within the Enforcement Division of a provincial securities regulator may organize and conduct themselves, in order to maximize the use of available regulatory tools, while ensuring Charter rights are respected. With that in mind, the protocol below has been divided into two sections: the first envisions the same team starting a regulatory inquiry that ultimately results in the investigation of a quasi-criminal offence; the second addresses the scenario of parallel regulatory activities where an administrative inquiry starts and, subsequently, a parallel investigation into penal liability also commences.

a) Protocol where single team conducts inquiry

Nothing prevents compliance reviewers or those conducting administrative inquiries from passing files containing validly obtained information to investigators.⁷⁶ Accordingly, the same team inquiring into a matter may use the information they have gathered once they decide the investigation has shifted to one where the predominant purpose is penal liability. We suggest the following protocol for a single team conducting an inquiry:

• The regulatory enforcement team commences an inquiry into suspected non-compliance with securities legislation. At this time, the team can make full use of statutory powers of compulsion.
• Clear guidelines should specify as to when an investigation should proceed administratively or quasi-criminally, providing a standard against which a court may review the team's actions.⁷⁷
• Where the team decides that the predominant purpose of the inquiry is penal liability. The decision should be documented and clearly communicated to all team members.⁷⁸ This will assist a court's determination as to when the Rubicon has been crossed.
• After a decision to proceed quasi-criminally has been made, the team should communicate the decision to the target of the investigation and advise the target as to his or her rights.⁷⁹
• The team should be aware of a number of consequences of proceeding quasi-criminally:
  
  
  • No further statements may be compelled from the target to advance the quasi-criminal investigation.⁸⁰
  • No written documents may be required from the target of the investigation or third parties, for the purpose of advancing the quasi-criminal investigation, without a warrant.⁸¹
    
    
• Team members may avail themselves of the summons and search warrant powers in the Provincial Offences Act⁸²to further the quasi-criminal investigation.

b) Protocol in the case of parallel investigations

Both Jarvis and the jurisprudence applying it make it clear that parallel or simultaneous compliance reviews or administrative inquiries and quasi-criminal investigations may be conducted.⁸³ We suggest the following protocol for teams operating in parallel:

• If, subsequent to the commencement of an administrative inquiry, a parallel quasi-criminal investigation has been launched, the administrative inquiry and the quasi-criminal investigation should be kept separate – e.g., involve different teams of staff members.
• Upon the commencement of the quasi-criminal investigation, the investigation team should communicate the decision to the target of the investigation and advise the target as to his or her rights.
• There can be a one-time transfer of information from the administrative inquiry team to the investigation team. Only information obtained by the administrative inquiry team prior to the commencement of the investigation can be passed on to the investigative team.⁸⁴
• As long as the predominant purpose of the administrative inquiry team is the pursuit of an administrative remedy, such as a public interest order, the team may continue to use the statutory powers of compulsion.⁸⁵ Information obtained by the administrative inquiry team cannot be passed on to the investigative team at this point.
• The investigative team may avail themselves of the summons and search warrant powers in the Provincial Offences Act to further the quasi-criminal investigation.

5) ENFORCEMENT UNDER THE PROPOSED CANADIAN SECURITIES ACT

The proposed Canadian Securities Act (Proposed Act) contains criminal offences similar to those in Part X of the Criminal Code.⁸⁶ If the Proposed Act is passed, the securities-related criminal offences will be repealed from the Criminal Code, with the exception of the general fraud provision. In the Proposed Act, the criminal offences have been modified so that they are consistent with the market conduct provisions and terminology of the Act.⁸⁷ Accordingly, largely the same conduct or actus reus forms the basis of the administrative, quasi-criminal offences and criminal offences under the Proposed Act. The additional mens rea elements that must be proven differentiate the criminal offences from administrative and quasi-criminal offences. This erases at least one of the principal differences between the income tax and securities enforcement contexts. It may also justify some segregation of the criminal enforcement functions from the inquiry and quasi-criminal functions, more along the lines of the segregation of functions under the CCRA.

Having three avenues of enforcement – administrative, quasi-criminal and criminal – under the Proposed Act will create both opportunities and challenges for securities law enforcement. The severity of the penalties that attach to the criminal offences will heighten the Charter interests at stake in regulatory inquiries and investigations, and may invite more Charter challenges. The new regulator must be attuned to Jarvis issues, implement a protocol to address them and exercise vigilance in regulatory inquiries and investigations.⁸⁸ It is in the public interest to ensure that the evidence gathering process complies with the Charter and to avoid the exclusion of evidence.⁸⁹

Footnotes

1 [2002] 3 SCR 757 [Jarvis].

2 For the purposes of this paper, the terms audit, inquiry, inspection or administrative investigation will be referred to as "inquiries".

3 Jarvis, supra note 1 at paras 2 and 96.

4 Ibid at paras 2 and 88.

5 Ibid at para 88.

6 Income Tax Act, RSC 1985, c 1 (5th Supp).

7 Ibid at para 94; David Stratas, "'Crossing the Rubicon': The Supreme Court and Regulatory Investigations" (2002), 6 CR 74 at 76.

8 Jarvis, supra note 1 at para 6.

9 Ibid at para 11.

10 Ibid at para 15.

11 Ibid at paras 18 -19.

12 Ibid at paras 22, 24.

13 Ibid at para 25.

14 Ibid at para 33.

15 Ibid at para 35.

16 Ibid at para 84.

17 [1995] 2 SCR 3 at paras 34-35 [Branch].

18 Ibid at para 93.

19 Ibid at para 94.

20 Ibid at para 104.

21 Ibid at para 94; Stratas, supra note 7 at 76.

22 Ibid; supra note 7 at 79.

23 R v. Landen, 2007 ONCJ 531 [Landen].

24 Jarvis, supra note 1 at para 51; Pezim v British Columbia (Superintendent of Brokers), [1994] 2 SCR 557 at para 74 [Pezim].

25 Supra note 1 at para 72.

26 Branch, supra note 17 at para 58.

27 Landen, supra note 23 at para 34; R v Maitland Capital Ltd, 2010 ONCJ 644 at 16 [Maitland Capital].

28 Landen, supra note 23 at para 60.

29 Maitland, supra note 27at 16.

30 Landen, supra note 23 at para 25; Maitland, supra note 27 at 16.

31 Landen, supra note 23 at para 28; Maitland, supra note 27 at 16.

32 Securities Act, RSA 2000, c S-4, s 194; Securities Act, RSBC 1996, c 418, s 155(1) [BCSA]; Securities Act, RSM 1988, c S50, s 136(1)(c); Securities Act, SNB 2004, c S-5.5, ss 179(2)(c)-(f); Securities Act, RSNL 1990, c S-13, s 122(1)(c) [NLSA]; Securities Act, RSNS 1989, c 418, s 129(1)(c)-(d); Securities Act, S Nu 2008, c 12, s 164(1); Securities Act, SNWT 2008, c 10, s 164(1); Securities Act, RSO 1990, c S.5, s 122(1)(c) [OSA]; Securities Act, RSPEI 1988, c S-3.1, s 164(1); Securities Act, RSQ c V-1.1 ss 202-203; Securities Act, 1988, SS 1988-89, c S-42.2, s 131(2); Securities Act, SY 2007, c 16, s 164(1); Maitland Capital, supra note 27 at para 16.

33 See e.g., R v Mercer (2005), 245 Nfld & PEIR 50 (NLCA) [Mercer].

34 Mary Condon, "Rethinking Enforcement and Litigation in Ontario Securities Regulation" (2006) 32 Queen's LJ 1 at 17, 25-26 [Condon]. Condon notes that "the frequency of criminal disposition in Ontario securities matters has historically been very low."

35 Landen, supra note 23 at para 34.

36 Ibid at para 34.

37 Ibid at paras 34, 60.

38 Mercer, supra note 33 at para 8.

39 NLSA, supra note 32 at s 12.

40 Mercer, supra note 33 at para 8.

41 Ibid at para 4.

42 Ibid at para 5.

43 Ibid at para 39.

44 Ibid.

45 Ibid at para 42.

46 Landen, supra note 23 at para 6.

47 Ibid at paras 7, 42.

48 Ibid at para 9.

49 Ibid.

50 Ibid at paras 9, 47.

51 Ibid at paras 2-4.

52 Ibid at para 69.

53 Ibid.

54 Ibid at para 72.

55 Maitland, supra note 27 at 3.

56 Ibid at 3-4.

57 Ibid at 5.

58 Ibid at 6.

59 Ibid at 7.

60 Ibid at 9.

61 Ibid at 9.

62 Ibid at 14, 17.

63 Ibid at 18-19.

64 Ibid at 21.

65 Ibid at 22.

66 Landen, supra note 23 at paras 54, 67.

67 Maitland, supra note 27 at 7, 20

68 Landen, supra note 23 at para 58.

69 Landen, supra note 23 at para 53.

70 Mercer, supra note 33 at paras 39, 42 and 54.

71 Todd Archibald, Kenneth Jull and Kent Roach, Regulatory and Corporate Liability: From Due Diligence to Risk Management (Aurora, ON: Canada Law Book, 2005) at 11:20:40.

72 Jarvis, supra note 1 at para 89.

73 Stratas, supra note 7 at 80.

74 Ibid.

75 Ibid.

76 Jarvis, supra note 1 at para 95.

77 The Court's reasons in Landen emphasized the need for a protocol or policy to address when the decision to proceed criminally should be made and the consequences that flow from it, to "keep enforcement options alive for the Commission, rather than imperilling its choices". Landen, supra note 23 at para 58.

78 Landen, supra note 23 at paras 57-58.

79 Jarvis doesn't require this but it is advisable as a matter of good practice. See Chris Sprysak, "Life after Jarvis – Just How Much Help Must You "Voluntarily" Give the Canada Revenue Agency?" (2006) 43 Alta L Rev 713-742 at para 69 (QL) (noting that in the Income Tax Act context, the CCRA should communicate its purposes and the objectives of its activities to the affected parties in a timely fashion).

80 Jarvis, supra note 1 at para 96.

81 Ibid at para 96; Mercer, supra note 33 at para 39; Maitland, supra note 27 at 13; Stratas, supra note 7 at 81; Rick Libman, "Charter Protection in Regulatory Investigations: The Legacy of R v. Jarvis and 'Crossing the Rubicon'. Blame it on Caesar." (Paper delivered at the Fifth Annual Charter Conference, Toronto, Ontario Bar Association, 2006) at 6.

82 See e.g., RSO 1990, c P-33, s 22 (summons), 158 (search warrant).

83 Jarvis, supra note 1 at para 97; Mercer, supra note 33 at para 39.

84 Jarvis, supra note 1 at para 97; R v Ling, [2002] 3 SCR 814 at paras 7, 32; Stratas, supra note 7 at 81.

85 Jarvis, supra note 1 at para 97; Mercer, supra note 33 at para 39.

86 See Criminal Code, RSC 1985, c C-46, ss 380-84, 400; Proposed Act, ss 158 (Fraud), 159 (Affecting Market Price), 160 (Market Manipulation), 161 (Insider Trading), 162 (Misrepresentation About Security).

87 There are problems with the offences in the Criminal Code because they are formulated differently and use terminology that is different from that used in provincial securities acts. See Condon, supra note 34 at 24-25.

88 Sprysak, supra note 79 at para 69.

89 See Landen, supra note 23 at para 68.

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