Defining The Public Interest Power: What Oasis Means For Respondents In OSC Enforcement Proceedings

Key takeaways

• In Oasis World Trading Inc (Re),¹ the Ontario Capital Markets Tribunal found for the first time that a proprietary day trading firm acted contrary to the public interest by failing to establish and maintain adequate systems of control and supervision.
• The Tribunal applied the two-part public interest test from Riot Platforms, Inc v. Bitfarms Ltd² — a test formulated in the context of a dispute between private parties over a shareholder rights plan.
• The Riot framework also included a justificatory step in the public interest analysis — permitting the respondent to demonstrate that even where the two-part test has been met, exceptional circumstances nonetheless justify the impugned conduct. The Tribunal was silent on this step in Oasis. Given the specific context in which the Tribunal has applied this step in other cases — most commonly, to assess whether a party’s conduct that departs from the takeover bid regime should be permitted to continue — while this step forms part of the public interest analysis in the transactional context, it does not appear to extend to enforcement proceedings.

In Oasis, the Ontario Securities Commission (OSC) alleged that Oasis World Trading Inc., a proprietary day trading firm with more than 600 traders located in China, engaged in spoofing and wash trading on Canadian and Australian markets from 2018 through 2020, traded without registration, lacked adequate systems of control and supervision, and improperly provided direct electronic access (DEA) to unauthorized persons.

In the alternative, if the Tribunal found that Oasis was exempt from registration (and therefore not subject to the statutory compliance obligation in s. 32(2) of the Securities Act), the OSC submitted that the respondents engaged in conduct contrary to the public interest by failing to establish and maintain adequate systems of control and supervision.

The tribunal found that the respondents engaged in market manipulation in the form of spoofing and that Oasis improperly provided DEA to unauthorized persons. However, the Tribunal also found that Oasis was exempt from registration under NI 31-103 such that the statutory obligation under s. 32(2) to maintain systems of control and supervision did not apply to it. The Tribunal then turned to the OSC’s alternative allegation that the respondents engaged in conduct contrary to the public interest.

The public interest analysis

To determine whether the respondents’ conduct was contrary to the public interest, the Tribunal applied the test from Riot. In Riot, the Tribunal synthesized the standard for making an order under s. 127(1) of the Act where there is no contravention of Ontario securities law. That test requires the Tribunal to find that the impugned conduct

• undermined, in a real and substantial way, one or more clearly discernible animating principles underlying applicable provisions of Ontario securities law, and
• caused an effect that had a public dimension, such that it was in the public interest for the Tribunal to intervene.

Importantly, the Riot test was formulated in the context of an application by a shareholder to cease trade a shareholder rights plan — a dispute between private parties about whether a defensive tactic should be allowed to continue. The Tribunal in Riot expressly stated that it would be for future panels to decide whether, and to what extent, to incorporate its analysis into other kinds of proceedings.

In Oasis, the Tribunal noted that it did not receive detailed submissions from either the OSC nor the respondents on whether the Riot approach was appropriate in the context of an enforcement proceeding; the OSC simply submitted that Riot should apply, and the respondents did not object.

On the first element of the test, the Tribunal found that Oasis’s failure to establish and maintain adequate systems of control and supervision undermined, in a real and substantial way, a core animating principle of Ontario securities law regarding the maintenance of fair capital markets in which trading is conducted with integrity and in which all market participants can have confidence. On the second element, the Tribunal found Oasis’s inadequate supervision exposed other investors to a heightened risk of improper trading, noting that in some periods Oasis’s trading constituted close to 1% of all trades on certain marketplaces, thereby establishing that the effect of Oasis’s conduct had a public dimension warranting the Tribunal’s intervention.

We also note that the Riot framework included an additional justificatory step — that even where the two-part test is established, the respondent may demonstrate “exceptional circumstances” that would nonetheless justify the impugned conduct. In Riot and related disputed transaction cases, this step has most commonly operated as a mechanism by which a respondent target board can demonstrate that exceptional circumstances justify allowing a shareholder rights plan to remain in place despite the plan’s departure from the established takeover bid regime. The Tribunal in Oasis was silent on this step. However, given the specific context in which the exceptional circumstances analysis has arisen, while this step forms part of the public interest analysis in the transactional context, it does not appear to extend to enforcement proceedings.

Implications

This decision provides respondents in enforcement proceedings with greater clarity about the test that the Tribunal will apply when the OSC alleges conduct contrary to the public interest in the absence of a specific securities law contravention.

Market participants now know that the two-part Riot framework — requiring both a real and substantial undermining of animating principles and a public dimension warranting the Tribunal’s intervention — applies in enforcement proceedings. Given the specific disputed transaction context in which the “exceptional circumstances” step has been considered in the public interest analysis, it does not appear to extend to the enforcement context.

On August 25, the Tribunal ordered that the sanctions hearing will take place on December 11, 2026. We will continue to monitor and report on developments.

Footnotes

1. 2026 ONCMT 29.

2. 2024 ONCMT 27.