Monday, November 22, 2004
By James Langton
Making good on a promise it made in October, Ontario’s government today
introduced legislation that would enshrine civil liability for secondary
If passed, the legislation would allow the government to implement
broader rights for investors to sue companies for disclosing false or
misleading information. Civil liability already exists in the primary
market where investors receive a prospectus. The Ontario Securities Act
gives investors the right to sue if this information is false or
Implementing civil liability for secondary market disclosure requires
the introduction of technical changes to sections of the Securities Act
that have been enacted (in Bill 198 from 2002), but not proclaimed.
These technical changes would ensure that provisions on civil liability
for secondary market disclosure are consistent with the rest of the
Securities Act and would address other technical issues identified since
the measures were enacted.
The changes include:
is consistency with existing remedies for investors in the primary
liability standards for offences are fair and consistent across
primary and secondary markets; and
rating agencies consistently under both the new secondary market
civil liability provisions and the existing primary market
provisions to preserve investor access to ongoing information about
the credit ratings of companies’ debt securities.
If passed, these changes would allow
the government to seek proclamation of broader rights for secondary
market investors to sue for misleading disclosure and the failure to
make timely disclosure and specific prohibitions of misrepresentations,
fraud and market manipulation.
“The people of Ontario have a vested interest in improved investor
protection,” said chair of the Management Board of Cabinet Gerry
Phillips, in a release.”
“Implementing civil liability for investors in the secondary market,
where over 90% of shares are bought and sold, is the right thing to do
for investors in Ontario,” Phillips said.
Implementing civil liability for secondary market disclosure is one of
the recommendations from the Ontario Legislature’s
Standing Committee on
Finance and Economic Affairs (SCFEA) Report on the Five Year Review of
the Securities Act, tabled in the legislature October 18. Both SCFEA and
the Five Year Review (Crawford) reports recommended Ontario implement
civil liability for secondary market disclosure.