Spring Loading Recognized As An Offence Under The QSA In Québec

On August 9, 2016, the Tribunal administratif des marchés financiers (the "Tribunal") formerly known as the Bureau de décision et de révision en valeurs mobilières (or BDRVM), rendered a two-part decision, the second part of which involved what is known as "spring loading", now recognized as an offence under the Québec Securities Act1. The case involves accusations of tipping and insider trading in connection with a verbal offer by Open Text Corporation ("Open Text") to acquire Nstein Technologies Inc. ("Nstein") at a time when Nstein was seeking to be bought out. This is the first Quebec decision dealing with "spring loading", an offence that finds its origin in U.S. case law.

The first part of the decision deals with Pierre Légaré, the accountant of the chief executive officer of Nstein, Luc Filiatreault, who was accused of tipping. After having been informed by Mr. Filiatreault of Open Text's offer to acquire Nstein, Légaré traded on Nstein's shares while in