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ARTICLE · 01 FEBRUARY 2018

"Insider" Trading: Who Is An Insider?

Blake, Cassels & Graydon LLP
Blake, Cassels & Graydon LLP
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Blake, Cassels & Graydon LLP

Blake, Cassels & Graydon LLP

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The scope of people who may be in a special relationship with an issuer is very broad.

CanadaCriminal Law
Blake, Cassels & Graydon LLP
Blake, Cassels & Graydon LLP
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The Ontario Court of Appeal's decision in Finkelstein v. Ontario Securities Commission clarifies when a recipient of material, non-public information (MNPI) about a public issuer (a "tippee") may be liable for insider trading or tipping. In particular, the court addresses when a person may be inferred to be in a "special relationship" with an issuer sufficient to ground liability. The answer will depend on a variety of factors, including whether the tippee in question is a registrant.

Background

A person may be found liable for insider trading in Ontario if they trade in securities of an issuer when in possession of MNPI while in a "special relationship" with the issuer. A person in a special relationship with an issuer also may be found liable for tipping in Ontario if they inform another person of MNPI other than in the ordinary course of business.

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