INSIDER TRADING PROHIBITIONS NOW APPLY TO ISSUERS OUTSIDE
Prior to the amendment, insider trading and tipping prohibitions
set out in section 76 of the Act only applied to Ontario reporting
issuers' securities. As a result, trading in the securities of
public companies that were not reporting issuers in Ontario
(broadly, meaning non-Ontario companies whose securities were not
traded on Ontario exchanges) was not subject to the insider trading
prohibitions, even where other connections to Ontario (such as
trades, or "tips", made by an Ontario resident) were
With the new amendments, insider trading and tipping
prohibitions have been expanded to apply to trading in the
securities of both Ontario reporting issuers and any other issuers
whose securities are publicly traded. As a result, trading in the
securities of foreign companies whose securities are listed on
foreign exchanges will now be subject to the insider trading and
tipping prohibitions in section 76.
The legislative expansion of Ontario's insider trading
prohibitions is notable in that it follows recent attempts by
enforcement staff (Staff) of the Ontario Securities Commission to
similarly expand the scope of prohibited insider trading through
use of the general power to sanction "conduct contrary to the
public interest." For more information on those recent
efforts, see our June 2015 Blakes Bulletin: Broad Reach for Canadian Securities
Regulators for Insider Trading.
As set out in that bulletin, Staff has already prosecuted
insider trading in the securities of non-Ontario reporting issuers.
The new amendments are significant in that they both confirm
Staff's authority to undertake such prosecutions, and in that
they enable Staff to pursue more severe sanctions in doing so,
including large monetary penalties. Moreover, while Staff's use
of the public interest power only concerned insider trading, the
amendments expressly apply to both insider trading and tipping.
PROPOSED COOPERATIVE CAPITAL MARKETS REGIME IMPLICATIONS
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