The Court of Appeal for B.C. upheld a lower court’s ruling that an investor can’t invoke his charter rights to avoid providing evidence to the British Columbia Securities Commission (BCSC).
The court dismissed an appeal from Harish Tak who sought to challenge an order requiring him to give evidence to the regulator. Tak said he risked facing criminal prosecution in the U.S., where his compelled evidence could be used to incriminate him.
He sought an exemption from testifying as part of a BCSC investigation based on the protections against self-incrimination under the Charter of Rights and Freedoms.
The BCSC is investigating the trading and distribution of securities in NewGen Biopharm Corp. and Breathtec Biomedical Inc., and is inquiring into the activities of four brokers at Mackie Research Capital Corp. in Vancouver, including Tak’s brother.
Tak, who also has an account at the firm, is not a target of the investigation but the regulator believes he may have relevant evidence, the court noted.
The U.S. Securities and Exchange Commission is also investigating trading in the shares of NewGen and its public disclosures.
Before an interview with the BCSC, Tak sought assurances from the regulator that the contents of his compelled interview wouldn’t be shared with the U.S. authorities.
“The commission declined to provide such an undertaking. Mr. Tak attended the interview but refused to answer any questions,” the decision noted.
In 2021, a lower court ordered that Tak must testify to the BCSC, and that decision has now been upheld.
The appeal court ruled that the charter only limits the sharing of compelled testimony in cases where the witness establishes that they’re facing “a real and substantial risk of criminal prosecution” in a jurisdiction without comparable protections on the use of compelled testimony.
“In my view this appeal fails on the basis that the record does not establish on a balance of probabilities that Mr. Tak is at a real and substantial risk of criminal prosecution in the U.S. or that he would not be entitled to reasonably comparable derivative use immunity in that jurisdiction,” the court said in its decison.
“I see no error in the chambers judge’s conclusion that Mr. Tak’s concerns about a future criminal prosecution were entirely speculative. There is nothing in the record that suggests a real and substantial risk that this will occur,” the appeal court added.
At the same time, the court noted that the BCSC has legitimate interests in compelling testimony.
“Obtaining evidence to regulate the securities industry is a goal of substantial public importance. The securities market has long been recognized as an international one and effective regulation requires cooperation and reciprocal assistance between securities regulators in different jurisdictions,” it said.
Ultimately, the court found that Tak “failed to prove a real and substantial risk that he would be subject to a criminal prosecution in the United States and comparable protection from the derivative use of his compelled testimony would not be available.”
As a result, it dismissed his appeal.