In a settlement agreement recently endorsed by the Ontario Securities Commission (OSC), respondent Anand Hariharan agreed to settle insider trading allegations made by OSC enforcement staff (Staff) against him. The settlement is notable in that Mr. Hariharan had not actually contravened the insider trading provisions set out in Ontario’s Securities Act, as the relevant issuer was not a reporting issuer in Ontario. Staff had instead sought sanctions against Mr. Hariharan pursuant to the OSC’s general power to sanction “conduct contrary to the public interest.”
As such, the settlement demonstrates that even following recent decisions suggesting limitations on the scope of the public interest power, in certain cases the OSC may continue to use the public interest power to effectively broaden the scope of the prohibition on insider trading. In particular, the OSC may sanction individuals for insider trading activities even if those activities relate to a company that is not a reporting issuer in Ontario and whose securities are generally publicly traded elsewhere. Accordingly, those who engage in improper activities in relation to foreign public companies may be subject to sanctions under Ontario securities laws where the individuals have other connections to Ontario capital markets (such as being an Ontario resident or a director or officer of an Ontario reporting issuer).
John Tuzyk and Doug McLeod –Â Blake, Cassels & Graydon LLP – June 4, 2015.
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