Capital Markets Act consultation draft: proposed changes affecting investigations, enforcement and statutory civil liability



Global Publication November 2015

In August 2015 a Revised Consultation Draft of the provincial and territorial Capital Markets Act (CMA) was published for comment.

If enacted, the CMA would result in significant changes to securities regulation in Ontario, including in relation to investigations, enforcement and statutory civil liability.

Highlights of these important changes include:

  • New provisions prohibiting certain types of “market conduct”;
  • Prohibition on retaliatory actions by employers against employee whistleblowers;
  • Expanded circumstances in which a cease-trade order could be made, and by whom;
  • New investigation and review powers, broad information-sharing capability and narrowed confidentiality protections for those who are compelled to provide information or testimony during an investigation;
  • Broader rule-making authority over auditors and the potential for direct oversight of auditor oversight organizations such as the Canadian Public Accountability Board (CPAB) by the Capital Markets Regulatory Authority (the Authority)1;
  • Penal liability to employees who authorize, permit or acquiesce in the commission of an offence by a corporation, and liability to an employer for an employee’s contravention of capital markets law unless, among other things, due diligence can be shown;
  • Additional types of administrative sanctions;
  • Expanded  circumstances in which a receivership order could be made;
  • Reversal of the  onus on experts and directors/officers to establish due diligence for prospectus and circular misrepresentation;
  • For misrepresentations in an offering memorandum (presumably a “prescribed disclosure document”), expanded liability to an issuer’s directors and every person who signed the  document containing  the misrepresentation;
  • Reformulating the election required of plaintiffs for circular misrepresentation; and
  • Addition of a new circumstance in which  liability caps will not apply to secondary market claims.

The consultation draft comment period runs until December 23, 2015.

A detailed description of these changes, and their anticipated impact on various market participants including directors, officers, issuers and auditors, can be found here.  


1 The Authority will be a jointly and operationally independent regulator supervised by a board of independent directors.

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