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ARTICLE · 26 NOVEMBER 2018

When Is A Promissory Note A Security And Not A Loan?

Borden Ladner Gervais LLP
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Tiffin Financial Corporation ("TFC") and its principal Daniel Emerson Tiffin ("Tiffin"), were subject to a cease-trade order (the "Order") issued by the Ontario Securities Commission (the "OSC") in relation to a foreign exchange investment scheme.

CanadaCorporate/Commercial Law
Bevan Brooksbank
Bevan Brooksbank
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Background

Tiffin Financial Corporation ("TFC") and its principal Daniel Emerson Tiffin ("Tiffin"), were subject to a cease-trade order (the "Order") issued by the Ontario Securities Commission (the "OSC") in relation to a foreign exchange investment scheme. The Order prohibited Tiffin and TFC from trading in securities or relying upon any exemption under Ontario securities laws.  However, after the Order was issued Tiffin solicited funds on behalf of TFC and TFC ultimately issued $700,000 in secured promissory notes to several clients.  The notes were for a one year term, with interest ranging from 10% to 25%, and expressly relied on the accredited investor exemption under the Act.  While Tiffin in fact disclosed the OSC investigation and the Order, the clients viewed the transaction as a loan and not an investment.

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