Brokers’ Report – Special Edition (October 15, 2007)

Kerr v. Danier Leather Inc., 2007 SCC 44

The Supreme Court of Canada released a landmark corporate disclosure ruling on October 12, 2007. In a unanimous decision, the Court held that where a prospectus (or amendment) contains no misrepresentations on the date it is filed, information amounting to material facts¹ – but not material changes² – that subsequently arise cannot support an action under s. 130(1) of the Ontario Securities Act (the "Act").

Unseasonably warm weather in the spring of 1998 coincided with an initial public offering of Danier’s shares through a prospectus. The prospectus contained a forecast of Danier’s projected results for its fiscal fourth quarter for 1998. An internal company analysis prepared before the public offering closed, but after the receipt for the prospectus was issued, showed that Danier’s fourth quarter results lagged behind its forecast. Danier did not disclose its intra-quarterly