In granting an order extending freeze on assets, the Court found that the amended language of s. 126 (b) of the Securities Act, required a change to the proper approach to whether a freeze order should be granted. The amended approach requires the Commission to establish:
- That there is a serious issue to be tried in respect of the Respondents' breaches of the Act or other securities laws in another jurisdiction;
- That there is a basis to suspect, suggest or prove a connection between the frozen assets and the conduct at issue; and
- That the Freeze Directions are necessary for the due administration of securities laws or the regulation of capital markets, in Ontario or elsewhere.
This approach departed from the previous applicable test set out in Ontario Securities Commission v. Sextant Capital Management Inc. and lowered the Commission's burden to establish the strength of its case on the merits, from a "strong prima facie case" to a "serious issue to be tried" standard. As well, the Commission is required to show a only "basis" for a connection between the impugned conduct and the frozen assets, not a "close connection". Finally, the purpose of the freeze was expanded beyond preventing the dissipating of assets; it could also achieve the "preservation of assets, inappropriate use of investor funds and other situations where the freeze direction is necessary to protect the investing public or capital markets". Read the full decision here.
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