Québec Court’s Decision on Insider Tipping Restrictions


On April 7, 2014, the Bureau de décision et de révision (BDR), which is the administrative tribunal that has jurisdiction under the Québec Securities Act, dismissed a claim by the Autorité des marchés financiers (AMF) for an administrative penalty of $15,000 against Jean Lamarre, a member of the board of directors of Pebercan Inc. at the time of the events at issue.1

The AMF accused the director of having contravened section 188 of the Québec Securities Act by communicating privileged information to Véronique Jallabert regarding Pebercan Inc., the reporting issuer.

Section 188 of the Québec Securities Act provides, among other things, that the insider cannot communicate to any person information that is likely to influence the decision of a reasonable investor. In this case, the AMF alleged that Mr. Lamarre had communicated to Mrs. Jallabert that “things were not going well for Pebercan Inc.”

An interesting fact of this case is that Mrs. Jallabert had, prior to the hearing before the BDR, pleaded guilty to quasi-criminal charges laid by the AMF before the Court of Québec for having traded in Pebercan Inc.’s stock with privileged information.

While keeping in mind the principles elaborated by the Ontario Superior Court2 and the Ontario Securities Commission3 regarding the insider tipping restrictions in the Rankin case, the BDR considered that the AMF did not demonstrate that Jean Lamarre had contravened section 188 of the Québec Securities Act by communicating privileged information to Véronique Jallabert, since, among other things, the information he communicated – that is, that things were not going well for Pebercan Inc. – was not clear enough and was too uncertain to be characterized as privileged information according to the Québec Securities Act.

Furthermore, the fact that things were not going well at Pebercan Inc. was, according to the BDR, information known to the public at the time Mr. Lamarre communicated it to Mrs. Jallabert.

Finally, the fact that Mrs. Jallabert had pleaded guilty to quasi-criminal charges for having illegally used privileged information did not prove, according to the BDR, that it was Jean Lamarre who had transmitted the information to her. The BDR further added that, in the circumstances of this case, one must keep from transforming a trivial comment into privileged information.

1 Autorité des marchés financiers v. Jean Lamarre, 2014 QCBDR 29.

2 R. v. Rankin, 2006 CanLII 49283 (ONSC).

3 In the Matter of Andrew Stuart Netherwood Rankin (2008), 31 OSCB 3303.


Topics:  Board of Directors, Canada, Insider Trading

Published In: Business Organization Updates, Business Torts Updates, Civil Procedure Updates, Criminal Law Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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