Secondary market liability in Canada: securities class actions


Originally published in Practical Law Company's Multi-Jurisdictional Guide 2012/13: Dispute Resolution.

Investors, issuers and other stakeholders in Canada’s capital markets should be aware that all Canadian provinces and territories have recently amended their securities statutes to contain provisions that create civil liability for secondary market misrepresentation. Investors who purchase an issuer’s securities on the secondary market may now pursue a statutory claim against the issuer, its directors and officers, and other parties for any:

- Misrepresentations in the issuer’s continuous disclosure documents or oral public statements.

- Failure to make timely disclosure of a material change.

The enactment of this statutory regime has resulted in a marked increase in the number of securities class actions in Canada. According to a 7 February 2012 report from NERA Economic Consulting, a total of 35 proposed secondary market liability class actions have been filed since the regime was first introduced in Ontario in 2005. These cases accounted for two-thirds of all securities class actions filed between 2008 and 2011.

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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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