In this era of onlinetrading, questions arise about which securities regulator polices which trades. A recent decision from the B.C. Court of Appeal suggests that where a trade takes place is not of critical importance when it comes to enforcement. In this case, the location of a company based in British Columbia was more significant.
Lawyers with law firm Blake Cassels & Graydon LLP state in a note on the case: “The decision rejects a mechanical approach to jurisdiction and recognizes that e-commerce and instantaneous transmissions around the globe make the physical location of participants and trading activity less relevant than in the past.”
The case dealt with an insider trading charge against Kegham Torudag, who works in inves-tor relations. He had purchased shares in Icon Industries Ltd., when he knew of material facts about Icon that were not public.
Vancouver-based Icon trades on the TSX Venture Exchange. The shares’ sellers were located in B.C., as were the mineral rights that had given rise to the material facts in question.
The B.C. Securities Commission found that Torudag had violated the B.C. Securities Act. Torudag admitted his trades were illegal, but argued that the BCSC had no jurisdiction over the trades because: he had never been a B.C. resident; the trade took place in Toronto; and the transaction went through a U.S. online trading account.
The B.C. Court of Appeal, however, concluded there was a sufficient connection between the trades and B.C. to give the BCSC jurisdiction over the trades.In a note, Brandon Kain, a lawyer with McCarthy Tétrault LLP, states that the case may be significant for future litigation in which extraterritorial issues arise. He also notes that this ruling could be used by plaintiffs in class-action securities misrepresentation cases in which several provinces are involved. IE