LITIGATION UNLEASHED - Stikeman Elliott

2.2 Causes of action
2.2.1 Introduction
Investors will now have a statutory right of action where they acquired or disposed of
securities while there was an uncorrected misrepresentation in a document or a public
oral statement or while there was a failure to make timely disclosure of a material
change as required by the Securities Act.
This statutory right of action does not prevent an investor from suing for fraudulent
or negligent misrepresentation or on any other basis that might be allowed for under
the common law or under any other statutory scheme (e.g. a claim for oppression).
Such alternative approaches could be taken separately or possibly in tandem with a
proceeding under the Act. Similarly, the limitations on damages specified in the
amendments are not applicable to common law causes of action.
The statutory rights of action created by the amendments are summarized in chart
form as Appendix B.
In considering issues of liability under the provisions discussed below, it should be
remembered that the amendments define “responsible issuer” to include publicly offered
investment funds and “influential person” to include an investment fund manager.
Also, note that purchasers or sellers of derivative securities, such as options, and
guaranteed securities, also can seek damages.
2.2.2 Documentary misrepresentation
MEANING OF “DOCUMENT”
“Document” is defined in the amendments to mean any written communication
(including electronic communications):
• required to be filed with the OSC (or which is not required but nevertheless filed
with the OSC), a government securities or corporate agency or a stock exchange or
similar marketplace; or
• the content of which could reasonably be expected to affect the market price or value
of the security of the issuer.
This is an extremely broad provision that could apply to press releases, content on
websites and marketing materials, among other things.
WHEN A DOCUMENTARY MISREPRESENTATION OCCURS
A documentary misrepresentation occurs when any of the following releases a
document containing a misrepresentation:
• a responsible issuer;
STIKEMAN ELLIOTT LLP
LITIGATION UNLEASHED
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