Law Times

February 5, 2018

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BY ALEX ROBINSON Law Times T he Ontario Court of Ap- peal has ruled for the first time on the interpreta- tion of the definition of a "person in a special relationship" with an issuer in an insider trad- ing and tipper case. In Finkelstein v. Ontario Se- curities Commission, the Court of Appeal upheld an OSC panel's finding that Man Kin Cheng, a former investment adviser at TD Securities Inc., and Howard Miller were part of a five-person tipping chain that received insider in- formation that originated from Mitchell Finkelstein, a former partner with Davies Ward Phillips & Vineberg LLP. The Court of Appeal found that Cheng and Miller ought to have known that their tipper was in a special relationship with the issuer and that the material they received was, therefore, inside information. Lawyer Gillian Dingle of Torys LLP, who was not involved in the case, says the decision clarifies the law on tipping and tipping chains in insider trading cases. "This decision reinforces the ability of the OSC to rely on a reasonable inference drawn from fact," she says. In the decision, the Court of Appeal upheld a number of factors the original OSC panel set out to determine whether an individual is in a special relationship. The Securities Act holds that no person or company in "a special relationship with an issuer" should buy or sell securities of that issuer with knowledge of "a material fact or material change with respect to the issuer that has not been gener- ally disclosed." The act also bars the sharing of that information with anyone be- fore the information is disclosed. The Court of Appeal found that there are two categories of a "per- son in a special relationship with an issuer." One category is a person who is very closely connected to the issuer, and the second category is a person who is further removed but who received the non-public information. In 2004, Finkelstein was the lead lawyer in a proposed takeover of Masonite International Corp. by an American private equity firm called Kohlberg Kravis Rob- erts & Co. Licensing reforms may come from law society BY ALEX ROBINSON Law Times W hen Raquel Ness graduated from law school, finding an articling position was nearly impossible for her. The Barrie, Ont. lawyer ap- plied to countless firms in cities and towns across the province. She networked, approached law as- sociations and was open to going anywhere. But she struggled to find a po- sition in the traditional licensing route. "It was very difficult," she says. "There are minimal positions out there." She eventually decided to enroll in the Law Practice Program — an alternative to articling offered by the University of Ottawa and Ryer- son University that includes a four- month course and a four-month placement. Changes to articling and the broader licensing process might now be on the horizon as the law society's professional develop- ment and competence committee is expected to release a report in February that will suggest possible reforms. Last spring, the law society held a number of consultations — which it called "Dialogue on Licensing" — to engage the profes- sion on the issue. Some of the possible options that have been discussed include making the LPP a permanent pro- gram and the only pathway to li- censing. Some have said the problem with the LPP is that its candidates are perceived as second-tier and that it is not financially sustainable. But supporters of the program say there is no evidence that LPP can- didates are actually inferior in any way and that it provides a pathway to licensing for those who have been hampered by a shortage of ar- ticling positions in Ontario. The law society considered scrapping the LPP in 2016 before QUIET SEXISM Problem persists in legal industry P7 FOCUS ON Running your practice & law firm compensation P8 PM #40762529 $5.00 • Vol. 29, No. 5 February 5, 2018 L AW TIMES C O V E R I N G O N T A R I O ' S L E G A L S C E N E • W W W . L A W T I M E S N E W S . C O M FRANCHISE RULING Big win for franchisors and franchise industry P4 See Case, page 2 Richa Sandill says unpaid articling positions should be banned. See LSO, page 2 Insider trading ruling upheld by Court of Appeal Gillian Dingle says a recent Ontario Court of Appeal decision clarifies the law around tipping and tipping chains in insider trading cases. Photo: Robin Kuniski THE ULTIMATE SOURCE For Today's Legal Profession | 416.609.3800 | 1.800.387.5164 Online Free preview Subscribe today! 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