The Emergence of a New Battleground: Liability for Secondary Market Violations in Ontario
During the past decade, Canada has seen a dramatic rise in securities class action lawsuits. The vast majority of these lawsuits have been filed in Ontario, the location of Canada's principal public securities market, the Toronto Stock Exchange (TSX). The most likely explanation for this development is the enactment of section 138 of the Ontario Securities Act in 2005, otherwise known as Bill 198.
In this article, the authors provide illustrative data from Ontario to evidence the recent growth of securities class action filings. The article discusses the section 138 amendments, including such provisions as secondary market liability, certification of class status, and the monetary ceiling on liability. Also, the article examines some key differences between the Ontario Securities Act and the United States Securities Exchange Act.
The authors conclude that because of the plaintiff-friendly provisions found in the Ontario Securities Act, combined with favorable court decisions, U.S. investors will likely seek to litigate future claims that have a sufficient nexus to Canada in the Canadian courts. Moreover, court decisions that certify a global class will shape future litigation in Canada. Due to these developments securities class actions in Canada (and particularly Ontario) should remain vibrant and may well provide a forum for adequate redress for non-Canadian investors in appropriate cases.