Lexpert US Guides

28 | LEXPERT • December 2014 | www.lexpert.ca SECURITIES ENFORCEMENT securities practitioners as a refreshing restraint. " ere has been a sense within the last several years that the commission, at the urging of staff , has been fi nding conduct has been contrary to the public interest too easily. And there is law that shows it should be reserved for the most serious conduct that is abusive or reaches a high level of concern. "In this case, the commission declined to do that, I think signaling for the fi rst time that there should be restraint in how you apply this. at's important because there should be certainty in the capital markets." Michael Robb, a class-action litigator with Siskinds LLP in London, Ont., says he and his partners were "somewhat surprised there were no fi ndings against the respondents. " is was a massive undertaking for the OSC, they invested a lot in this," says Robb, who is lead counsel in a class action against Baffi nland. " e respondents had tremendous legal teams and threw a ton of resources at it, and the OSC of course has resources that are limited by the fact it's a public entity. "So it was a surprise but not a total surprise because of the way the playing fi eld tilts a little bit." e senior lawyer who asked not to be identifi ed says Baffi nland has put the OSC's next few prosecutions under an enormous pressure. "At some point, you may fi nd people asking whether the defense Bar overmasters the staff in these cases. If that happens, you wonder whether an argument will start to be made for contract- ing out, for rent-a-prosecutor, whether you'll hire [Toronto] Bay Street lawyers to prosecute these cases." In fact, the OSC has lined up a senior Bay Street litigator to help Larry Lowenstein > Osler, Hoskin & Harcourt LLP "INTERVENING EVENTS and the passage of time can negate or diminish the importance of confidential business information. If it's stale, it doesn't impact the market. You're not carrying a secret." with its next high-profi le prosecution involving Sino-Forest Corp. > In Alberta, home to most of Canada's oil patch companies, the securities commission staff hasn't been having much better luck with insider-trading prosecutions. " ey've had a very bad run of luck enforcing insider-trading cases," says John Blair, national head of the commercial litigation group at Borden Ladner Gervais LLP in Calgary. " ere have been outright acquittals on four insider trading cases — this is what most people in Alberta are talking about in enforcement issues these days. " e Alberta Securities Commission just hasn't had a lot of luck at proving the cases where they're relying on circumstantial evidence." e ASC has been bringing cases where trades are conducted under questionable circumstances, he says, and the panels hearing the actions are demanding proof. " ey're going to the panels saying: ' is trade is simply too suspicious to be anything other than illegal. And the panels are really holding their feet to the fi re in proving that there's really no other possible explanation." Asked whether he believes a single national regulator might have more success in enforcement prosecutions, Blair says no. e idea of a national regulator has been kept alive even though Ottawa's attempt to legislate one was dealt a death blow by the Supreme Court of Canada. Four provinces are pushing ahead with a plan to voluntarily adopt a uniform securities Act. Ontario, British Columbia, Saskatchewan and New Bruns- wick have committed to joining Ottawa's Co-operative Capital Markets Regulatory System, which will be opening an offi ce in late 2015, and they are working on other provinces to come in as well. ose four provinces alone represent about three quarters of Canadian listed companies and about 53 per cent of total market capitalization. Alberta and Québec are two notable holdouts. > Blair, who's based in Calgary, says while some people may view Canada's system of 13 separate provincial and territorial regula- tors as quaint in a globalizing world, it works well. "Provincial regulators, if anything, are actually very motivated to keep an eye on enforcement because, if they don't, they lend credence to the movement that there should be a single national regulator," he says. "Alberta regulators are very conscious there are issues unique to Alberta and that they need to be very vigilant or risk adding fuel to the argument there should be a single regulator looking at everything." In Montréal, Julie-Martine Loranger holds much the same view. "I think it's more effi cient like this, especially in Québec where AMF [Autorité des marchés fi nanciers] is really on top of its game. ey are sophisticated, they're good. I don't see how it could be better done. A nd I'm afraid if they're not right here, they wouldn't be as eff ective." Sandra Rubin is a Toronto-based legal-affairs writer.

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