Canada: Broker’s Report

Last Updated: November 10 2005
Article by Kara Beitel
Most Read Contributor in Canada, September 2016

Originally published November 2005


In August, we reported Andrew Rankin’s conviction on ten counts of tipping under subsection 76(1) of the Securities Act. On October 27, 2005, Justice Khawly sentenced Rankin to six months in jail on each of the ten counts, to be served concurrently. OSC staff was seeking a prison sentence of between three and five years. Counsel for Rankin argued that he should receive a suspended sentence.


On October 14, 2005, the Ontario Securities Commission (the "Commission" or "OSC") released its decision in ATI Technologies Inc., et al. At issue was whether former ATI Technologies ("ATI") chief executive officer, K.Y. Ho, and his wife, Betty Ho, traded their shares of ATI with knowledge that ATI would not meet its third quarter forecasts contrary to subsection 76(1) of the Securities Act (the "Act"). The Commission found that OSC staff had not met their burden of establishing, by clear and convincing proof based on cogent evidence, that any violation had occurred.

As a preliminary matter, the Commission addressed the respondents’ objection that staff was relying almost entirely on hearsay evidence. The vast majority of staff’s evidence against the respondents consisted of e-mails between senior executives at ATI during the relevant period. None of the individuals whose e-mails were introduced into evidence were called as witnesses by staff. Staff relied on subsection 15(1) of the Statutory Powers Procedures Act, which generally permits tribunals to admit evidence irrespective of whether it would be admissible in court. However, noting that there was no opportunity to cross-examine the authors of the e-mails and no evidence as to the authors’ thinking when they wrote the e-mails, the Commission held that little weight should be given to these documents.

In order to find that a violation of subsection 76(1) had occurred, staff was required to prove that:

  1. it was a fact at the time of the respondents’ disposition that ATI would fall short of its forecasted revenue and earnings for Q3-2000, and;
  2. the respondents knew at the time of the disposition that ATI would fall short of its forecasted revenue and earnings for Q3-2000.

Because the allegations against K.Y. Ho were the result of a charitable donation of ATI shares, a related issue was whether a charitable donation constituted a "sale" for the purpose of subsection 76(1). The Commission found that staff’s case fell short on each issue. Witnesses called by the respondents, many of whom wrote the e-mails relied upon by staff, testified that during the relevant period they had confidence that ATI would meet, or even surpass, its forecasts for the third quarter. These witnesses allowed the Commission to place the e-mails and other documents relied upon by staff "in context".

Accordingly the Commission held it was not a fact at the time of disposition that ATI would fall short of its forecasts. As a result, there was no need to decide the remaining issues. Nonetheless, the Commission reviewed the evidence in respect of these remaining issues. It noted that staff had improperly changed its allegations against the respondents in its closing written submissions. However, even on the amended allegations, staff had not met its burden. Both respondents had testified as to their knowledge at the time of disposition, and Mrs. Ho testified as to her reasons for disposing of her ATI shares. The Commission accepted the evidence of both respondents.

Finally, the Commission considered the novel question of whether charitable donations were "sales" for the purpose of subsection 76(1). In this respect, staff relied on evidence that the donation of shares can result in considerable tax savings for the donor. These tax savings, it was argued, represented consideration for the "sale" of the shares. The Commission did not introduce evidence of any savings realized by K.Y. Ho, nor did it address an OSC Policy which states that disposition by way of gift was not a "trade" within the meaning of subsection 1(1) of the Act. Moreover, counsel for Mr. Ho relied on U.S. case law which held that a gift to charity could not be considered a sale when made in good faith and without pretence or subterfuge.

There was no evidence that the donations were not made in good faith, and as such the Commission concluded that the donation of shares were not "sales" for the purpose of subsection 76(1).


On October 11, 2005 the Investment Dealers Association ("IDA") ordered Union Securities Ltd. ("Union") to pay a $50,000 fine and $30,000 in investigation costs for failing to provide free access to certain records requested by the IDA Enforcement Department ("Staff"). The IDA acknowledged that Union provided access to all records it felt were relevant, however, it refused access to records it believed were irrelevant or purely personal to its employee.

In determining the penalty, the IDA cited the Ontario District Council’s decision in IDA v. Derivative Services Inc. [2000] I.D.A.S.C.D. No. 26: "Failure to provide information requested in an investigation undermines the integrity of the self-regulatory system and the effectiveness of its operations". The IDA noted that as a result of Union’s refusal to provide access to the documents, Staff’s investigation was effectively stalled for eight months or more, and as a result of that delay, Staff’s investigation has "probably suffered some prejudice".

This decision reinforces By-law 19.5(b), which provides that the right to determine relevance rests with the IDA, and not with the member. Finally, the IDA noted: "a failure to cooperate, even if based on a matter of principle, strikes at the very integrity of the [IDA’s] duty and ability to police itself."

This newsletter is prepared by Christina K. Litt and Kara L. Beitel as a service for our clients and other persons dealing with broker liability and compliance issues.

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 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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.