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Securities - "Trading". Valentine v. Ontario Securities Commission
In Valentine v. Ontario Securities Commission (Ont Div Ct, 2025) the Ontario Divisional Court dismissed an appeal, this from a Capital Markets Tribunal decision that found that the appellant had breached a 2004-issued 15-year ban "by the Ontario Securities Commission (the “Commission”) from participating in Ontario’s capital markets".
Here the court considered the interpretation of the securities term: "trading":[36] As Mr. Valentine acknowledged, the definition of “trading” is broad and, under s. 1 of the Act, includes “any act, advertisement, solicitation, conduct or negotiation directly or indirectly in furtherance” of any of the defined acts of trading in clauses (a) to (d) of the definition of “trade” or “trading”.
[37] In the Merits Decision the Tribunal summarized the law in this way:[112] The Tribunal has adopted a contextual approach when determining whether acts are in furtherance of a trade, examining “the totality of the conduct, including the surrounding circumstances, the impact of the conduct and the proximity of the acts to actual or potential trades in securities.”
[113] Acts in furtherance of a trade do not require a completed sale of a security. The Tribunal has found that “there must be at a minimum something done for the purpose of furthering or promoting the sale or disposition.” While not necessary, the “receipt of consideration or some other direct or indirect benefit” can be a “strong indication” of an act in furtherance of a trade. [Citations omitted.] [38] Mr. Valentine does not challenge the Tribunal’s summary of the law. He also acknowledges that there is no “bright line” that separates acts that are indirectly in furtherance of a trade from acts that are not. However, he highlights a decision from the Ontario Court of Justice where the court does identify numerous acts as being acts in furtherance of trading – R. v. Lowman, 2017 ONCJ 433. At para. 72 of that decision the following acts are itemized:. Creating and maintaining a website designed to “excite the interest” of investors;
. Issuing and signing share certificates;
. Distributing promotional materials concerning potential investments;
. Accepting money from investors and depositing investor cheques for the purchase of shares in a bank account;
. Providing potential investors with subscription agreements to execute;
. Paying referral fees to existing investors who referred new investors;
. Preparing and disseminating forms of agreements for signatures by investors;
. Preparing and disseminating of materials describing investment programs;
. Conducting information sessions with groups of investors; and
. Meeting with individual investors. [39] Mr. Valentine emphasized that he did not engage in any of the listed activities. While this may be true, Mr. Valentine also agreed that the above list is not exhaustive. In other words, it was not an error of law for the Tribunal to rely on factors that were not itemized in the Lowman decision.
[40] As Mr. Valentine has acknowledged, there is no hard and fast rule as to what acts constitute acts in furtherance of a trade. Making this determination is a contextual exercise that turns on the facts of each case. What Mr. Valentine is challenging are the Tribunal’s factual findings or, at best, its findings of mixed fact and law. This requires establishing a palpable and overriding error.
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[44] Mr. Valentine’s compensation for the services he provided in relation to the Stock Secured Financing transactions was directly tied to the profit earned from the sale of the shares. The Tribunal relied on its own jurisprudence to find that “the ‘receipt of consideration or some other direct or indirect benefit’ can be a ‘strong indication’ of an act in furtherance of a trade”: Anderson (Re), 2004 ONSEC 13, at para. 34. See also York Rio Resources Inc. et al, 2013 ONSEC 10, 36 O.S.C.B. 3499, at para. 90; Merax Resources Management Ltd. (Crown Capital Partners) et al, 2011 ONSEC 35, at para. 78; Limelight Entertainment Inc. et al, 2008 ONSEC 4, 31 O.S.C.B. 1727, at para. 131; Momentas Corporation et al, 2006 ONSEC 15, 29 O.S.C.B. 7408, at para. 87.
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