Securities Act Reprisal

Recent amendments to Ontario’s Securities Act[1] have created unique remedies which may be used only in particular circumstances against publicly traded companies.

Context of the Remedy

There are two situations giving rise to this remedy of reprisal.

The first context occurs when adverse action, such as termination or demotion, for example, has been taken by the public company against a person who has:

  1. Expressed an intent to complain or has complained to the OSC or police about a person or company about an issue which is believed to be contrary to securities law.
  2. Or contrary to a by-law or a regulatory instrument of a recognized self-regulatory organization or a law enforcement agency;[2]

In a situation, for example, of a person terminated due to expressed concerns of tainted financial statements, the statutory remedy would follow.

The second situation for jurisdiction of this remedy is when a person co-operates or testifies in an OSC investigation or hearing and more importantly, “in a judicial proceeding”, related to securities wrongdoing. This is not limited to the initial complainant.

The Remedy

The relief under the statute available to such an effected person is nothing short of extra-ordinary. The person may sue for arrears of salary, in a termination case, through to the date of hearing, which are doubled. In addition, reinstatement may be ordered.

Compensation for the purpose of defining base line salary for the period through to the hearing date is very broadly defined. It includes virtually all forms of income imaginable, including bonuses, commissions, benefits and any housing provided.

Equally important is that the onus of proof is reversed. The employee need not prove the case, but rather the employer must show that the retaliatory action is not due to the complaint made by the employee.

The statue also provides that any form of agreement which precludes an employee from providing information of alleged wrongdoing to the Ontario Securities Commission is void.

Let Legal Advice Allow Prevention and a Remedy When Needed

Companies which are publicly traded must ensure all employees are free of such repercussions. Persons working for such companies will know that protections are afforded to them to allow then full protections to disclose wrongdoings.

The need for strong protections to whistle blowers in public companies is evident. The OSC is determined to protect the public from shady publicly traded companies. Both employers, employees and indeed the public markets will all benefit from these protections.

This law was brought into existence in two steps, the first of which was in the summer of 2016. The remedy section was brought about by very recent amendments on December 14, 2017. Little public acclaim has been afforded to it. These amendments are powerful, important and must be understood by all, whether you be employer or employee.

If you have questions about this remedy of statutory reprisal, contact the offices of Toronto employment lawyers Grosman Gale Fletcher Hopkins. We regularly advise workplace parties on a wide range of legal workplace issues. Contact us online or by phone at 416 364 9599 to schedule a consultation.




[1] Section 121.5

[2] The precise wording is” sought advice about providing information, expressed an intention to provide information, or provided information to the person or company, the Commission, a recognized self-regulatory organization or a law enforcement agency about an act of the person or company, or person acting on behalf of the person or company, that has occurred, is ongoing or is about to occur, and that the employee reasonably believes is contrary to Ontario securities law or a by-law or other regulatory instrument of a recognized self-regulatory organization; or

(b) in relation to information provided under clause (a), cooperated, testified or otherwise assisted, or expressed an intention to cooperate, testify or otherwise assist in,

(i) an investigation by the Commission, a recognized self-regulatory organization or a law enforcement agency, or

(ii) a proceeding of the Commission or a recognized self-regulatory organization, or a judicial proceeding. 2016, c. 5, Sched. 26, s. 3.”