In September 2018, the U.S. Securities and Exchange Commission (“SEC”) charged Elon Musk, the former Chairman of Tesla, Inc., with securities fraud. A series of Tweets on Musk’s personal page, the first of which read: “Am considering taking Tesla private at $420. Funding secured”, caused share prices to instantly soar. In reality, the potential transaction was uncertain and subject to a number of contingencies. Market confusion and disruption ensued.
In Lavender v Miller Bernstein LLP (“Lavender”), the Ontario Court of Appeal overturned an order granting summary judgment to a class of investors in a class action against the auditors of a defunct securities dealer. In doing so, the Court gave a detailed examination of the duty of care analysis as it applies in the wake of the recent Supreme Court of Canada decision, Deloitte & Touche v Livent Inc (“Livent”).
The Court of Appeal Places Limits on Secondary Market Misrepresentation Claims: Ontario is not a default jurisdiction for foreign issuers whose securities were purchased in Ontario
In Yip v HSBC Holdings plc (“Yip”) the Ontario Court of Appeal recently confirmed that “there is nothing unfair” in tying jurisdiction to litigate against a foreign defendant in a secondary market misrepresentation to the place where the securities were traded. The Court’s decision reflects the international standard that purchasers who use foreign exchanges should look to the relevant foreign court to litigate their claims and closes the door on creating a universal or default jurisdiction for secondary market claims under the Ontario Securities Act.
The past year has seen a flurry of interesting cases dealing with limitation periods. My colleagues and I have commented on them previously, including here and here. In Pennyfeather v Timminco Limited, the Court of Appeal for Ontario had the chance to weigh in on limitation periods under the Ontario Securities Act (“OSA”).
The Sino-Forest class action has been certified, and leave was granted to bring a claim under the Securities Act for secondary market misrepresentations.