CEO’s at Risk for Public Company Press Releases

A recent decision of the Ontario Securities Commission (OSC) concerning the responsibility of a CEO for his company's 2003 press release, which contained information concerning an accident and its effect on third-quarter earnings results, has received considerable press comment.

The press treated as novel the OSC's finding that Eugene Melnyk, who was CEO of Biovail Corporation at the time of the release, had acted contrary to the public interest in allowing the release of information even though no violation of the Securities Act had been demonstrated. (Before Mr. Melnyk's case was heard, Biovail had settled the charges brought against it by the OSC.)

In fact, the OSC's finding is not a novel development at all. The OSC has a very well-established jurisdiction under the Securities Act to impose penalties in the public interest, and it has been established for decades that the OSC can exercise its public interest jurisdiction in the absence of a Securities Act viola