On November 4, 2008, Justice Shamai of the Ontario Court of
Justice released reasons in R. v. Landen, an insider
trading and tipping case brought pursuant to sections 76(1) and
76(2) of the Ontario Securities Act. Justice Shamai found the
defendant, Barry Landen, guilty of selling securities of
Agnico-Eagle Mines Limited ("Agnico-Eagle") while in
possession of material undisclosed information. Mr. Landen was
acquitted of tipping his friend, Stephen Diamond, of material
undisclosed information and Mr. Diamond was accordingly acquitted
of engaging in insider trading himself.
The Ontario Securities Commission (the "OSC"), having
decided to bring proceedings in criminal court rather than before a
regulatory tribunal, was required to prove its case beyond a
reasonable doubt. As is common with allegations of tipping, the
OSC's case was circumstantial. Both Messrs. Landen and Diamond
denied that Mr. Landen had shared material undisclosed information
about Agnico-Eagle with Mr. Diamond. The OSC relied on evidence of
their long friendship, a joint trading account held in both of
their names and a transfer of funds from Mr. Landen to Mr. Diamond
in the days before Mr. Diamond engaged in fortuitously timed and
profitable trades in Agnico-Eagle. Evidence was also introduced
indicating that the Agnico-Eagle options purchased by Mr. Diamond
accounted for the vast majority of the total put options traded in
Canada and the United States on the days in question, and were
"of a volume unmatched in any previous trade on either the
Canadian or American exchange".
Mr. Diamond responded to the circumstantial evidence relied upon
by the OSC by providing other, plausible explanations in each
instance. He admitted to a long friendship with Mr. Landen, but
testified that he and Mr. Landen had decided to never discuss Mr.
Landen's business, particularly in light of the fact that Mr.
Diamond was a somewhat active trader. Mr. Diamond further testified
that he and Mr. Landen held a joint trading account to prevent Mr.
Diamond's former wife from obtaining or freezing the assets in
the account and explained that Mr. Landen had no involvement with
the account (the trades in question were not conducted through the
joint account). Finally, Mr. Diamond described the money he
received from Mr. Landen in the days preceding his trades as a loan
intended to assist with the renovation of his home and adduced
invoices and receipts into evidence in support of this testimony.
Finally, there was evidence before the court that Mr. Diamond was a
trader with a pattern of accepting increased risk.
In acquitting Mr. Landen of tipping, and Mr. Diamond of insider
trading, the court relied on case law to the effect that a finding
of guilt can only be made where there is no other rational
explanation for the circumstantial evidence. In this case, while
noting that the theory of the prosecution was attractive, the
credible testimony of Mr. Diamond in support of an innocent
explanation foreclosed the conclusion, on the requisite standard,
that he was an insider of Agnico-Eagle by virtue of being tipped by
As reported in November's Brokers' Report, a Hearing
Panel of the Investment Industry Regulatory Organization of Canada
("IIROC") quashed proceedings against two respondents,
Paul Van Benthem and Anthony Petriccione, finding that IIROC did
not have jurisdiction over former members pursuant to the Ontario
Divisional Court's decision in Taub. The Hearing Panel
has since released its reasons.
The reasons reveal that the Hearing Panel was persuaded that it
was bound by the principle of stare decisis to follow
Taub as it had been decided (i.e., at the time of the
Hearing Panel's decision) and as such it was not permitted to
consider contradictory decisions in British Columbia or that leave
to appeal the Taub decision had been sought.
However, in so doing the Hearing Panel made it clear that its
order did not necessarily forever end the proceedings against the
respondents. It was not dismissing the case, nor was it holding,
independent of Taub, that IIROC had no jurisdiction over
former registrants. Instead, the Hearing Panel noted that the
proceedings were void, ab initio (i.e., in the first instance), but
that if Taub were reversed they would then be considered
valid, ab initio. As such, if Taub were reversed it was
open to IIROC to continue with the proceedings. The Hearing
Panel's order reflects this reasoning, providing that
"[t]hese proceedings are quashed, unless and until Taub is
reversed or another binding court decision decides that IIROC has
jurisdiction over former registrants ..." Since the Hearing
Panel's decision, the Ontario Court of Appeal has granted IIROC
leave to appeal the Taub decision.
In Irwin v. Alberta Veterinary Medical Association, 2015 ABCA 396, the Alberta Court of Appeal found that the "ABVMA" failed to afford procedural fairness to a veterinarian undergoing an incapacity assessment.
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