Canada: Securities Litigation Snapshot (April 2014)

New Enforcement Initiatives

On March 10, 2014, the Commission released OSC Staff Notice 15-702 – Revised Credit for Cooperation Program. Most notably, the Notice introduced no-contest settlements, whereby Staff would enter into settlement agreements with respondents without admissions of fact or liability and non-prosecution agreements for market participants deemed to be satisfactorily cooperative by OSC Staff. To read more about the OSC's Revised Credit for Cooperation Program please click here.

OSC Enforcement Proceedings

Research Reports

Alka Singh and Mine2Capital Inc. (Re)

On March 27, 2014, the Commission approved a settlement agreement entered into with Alka Singh and Mine2Capital Inc. ("Mine2Capital") regarding the sale by Singh and Mine2Capital of research reports in which they made recommendations to buy certain securities. It was agreed that they  were engaging in the business of advising while not registered to do so and while not qualifying for any exemption from registration. A more detailed description of the settlement agreement can be found here.


IIROC Enforcement Proceedings

Failure to Adequately Supervise

Dickson (Re)

An IIROC Hearing Panel approved a settlement agreement between IIROC Staff and Gordon Bruce Dickson on February 27, 2014 whereby Dickson acknowledged that, as a Branch Manager, he failed to adequately supervise three Registered Representatives and client accounts. One Registered Representatives purchased junior exploration companies in two accounts in excess of the stated risk tolerance on the new client application forms. Two Registered Representatives recommended, but failed to adhere to, an unsuitable index option strategy. The Hearing Panel imposed a five year prohibition on Dickson being registered as a Branch Manager or in any supervisory capacity and a fine of $60,000. A summary of the settlement agreement can be found here.

Off-Book  Investments

Dubois (Re)

An IIROC Hearing Panel accepted a settlement agreement that imposed a one month suspension, a fine of $20,000, and disgorgement of $10,724 on Daniel Dubois as a sanction for executing trades in offshore accounts of five clients held by Crèdit Agricole Suisse Bahamas while he was employed by Desjardins Securities Inc., off-book and without the knowledge of his dealer, Desjardins. A summary of the settlement agreement can be found here.

Pariak-Lukic (Re)

On March 6, 2014 an IIROC Hearing Panel imposed penalties on Lucy Marie Pariak-Lucic related to her recommendation and facilitation of off-book investments for clients without the approval or knowledge of her employer firm and without ensuring that a prospectus had been filed or that the investment qualified for a prospectus exemption. A summary of the Hearing Panel's decision was previously reported in the January 20th edition of Securities Snapshot and can be found here. The Hearing Panel ordered that Pariak-Lukic pay a fine of $50,000, and costs of $45,000 and that she rewrite the Canadian Securities Course and the Conduct and Practices Handbook examinations.

Proposed Guidance on Underwriting Due Diligence Published for Comment

On March 6, 2014, IIROC published for comment proposed guidance outlining common due diligence practices and suggestions for IIROC dealers involved in the offering of securities to the public as underwriters. The proposed guidance includes the expectation that every Dealer Member have written policies and procedures in place relating to all aspects of the underwriting process, due diligence plans that reflect the context of the offering and are sufficient to ensure the Dealer Member understands the business of the issuer and key factors affecting the issuer's business. The proposed guidance also notes that Dealer Members should clearly understand the boundary between business due diligence and legal due diligence such that matters that should be reviewed by the underwriter are not delegated to underwriter's counsel. Comments are due June 4, 2014.

Final Guidance Issued on the Use of Business Titles and Financial Designation

IIROC issued Guidance Note 14-0073 on March 24, 2014 on the Use of Business Titles and Financial Designations. The Guidance Note indicates that IIROC expects all firms to have policies and procedures relating to the use of business titles and financial designations that may be used by Approved Persons who deal with retail clients, the restrictions or prohibitions on these titles and pre-approval requirements. The Guidance Note further provides that particular scrutiny should be given to the use of business titles that convey an expertise in senior's issues or retirement planning. For a summary of the Guidance Note please click here.


2013 Enforcement Report

The MFDA released its 2013 Enforcement Report on March 27, 2014. The MFDA's priorities continue to be suitability, outside business activities, signature irregularities, matters of a serious nature including theft and fraud, and matters involving seniors and other vulnerable groups. Member supervision of Approved Persons is assessed in each of the above cases. The highlights of the report can be found here.

MFDA Enforcement Proceedings

Blank/Pre-Signed  Forms

Roy (Re)

An MFDA Hearing Panel approved a settlement agreement between Duane Roy and MFDA Staff on March 24, 2014 whereby Roy acknowledged using 57 blank or partially completed account forms to complete transactions involving 21 clients between 2007 and 2012, contrary to MFDA Rule 2.1.1. Roy agreed to a fine of $5000 and costs of $2500.

Unsuitable Leveraged Investments

Sarker (Re)

An MFDA Hearing Panel considered the appropriate penalty to be imposed on Saifur Sarker in a case involving unsuitable leveraged investments. Sarker admitted that he induced two clients to borrow, while he infl ted their assets and investments knowledge on their application forms and had a poor understanding of leveraging as an investment strategy. The Hearing Panel ordered a three year prohibition on registration, a fine of $20,000 and costs of $2500 against Sarker, taking into account personal mitigating circumstances. A more detailed description of the case can be found here.

Directors And Officers

Shoppers Drug Mart Inc. v. 6470360 Canada Inc.,
[2014] O.J. No. 476 (C.A.)

In Shoppers Drug Mart Inc. v. 6470360 Canada Inc., the Ontario Court of Appeal considered appeals of two cross motions for summary judgment brought by 6470360 Canada Inc. ("647") and Shoppers Drug Mart Inc. ("Shoppers"). One of the issues considered by the Court was the circumstances in which it is appropriate to pierce the corporate veil to find a director of a corporation personally liable. The Court of Appeal again confirmed that a corporate veil may be pierced where those in control expressly direct a wrongful thing to be done. A more detailed summary of the case can be found here.

Class Actions

Dugal v. Manulife Financial Corp. et al.,
[2014] O.J. No. 981 (Div. Ct.)

Manulife Financial Corporation ("Manulife") and the individual defendants brought a motion for leave to appeal a decision granting the plaintiffs leave to pursue claims under Part XXIII.1 (civil liability for secondary market disclosure) of the Ontario Securities Act and certifying the action as a class proceeding. The plaintiffs alleged that during the class period, Manulife misrepresented its equity market risk arising from its segregated fund/guaranteed products when it consistently advised class members that it had "effective, rigorous, disciplined and prudent" risk management systems, policies and practices.

On appeal, Manulife argued that the motions judge had erred in certifying the common law negligent misrepresentation claims because he ignored the underlying premise of Part XXIII.1 of the Securities Act, namely the unsuitability of common law misrepresentation claims for certification. Sanderson M.A. disagreed and dismissed the motion for leave, finding that the motions judge had not erred in certifying the negligent misrepresentation claims because in the case at bar there was a core misrepresentation alleged and the common issues trial judge would not be required to deal with multiple representations over a multi-year timeframe.

The Court of Appeal's decision is somewhat in contrast to the recent decision of  Perell J. in Millwright Regional Council of Ontario Pension Trust Fund (Trustees of) v. Celestica Inc., released on February 19, 2014, where Perell J. found that where there is a statutory misrepresentation claim and a common law misrepresentation claim for the same misrepresentation, the statutory claim is the "preferable way to resolve the Class Members' claims". Perell J. commented that the statutory claim was introduced precisely to overcome the difficulties of a class action for negligent misrepresentation with respect to the distribution of debt and equity instruments in the primary and secondary market for securities. Perell J. declined to certify the common law negligent misrepresentation claims in that matter as a result, finding they did not  meet the preferrable procedure test under the Class Proceedings Act.

About BLG

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions