Failure to File – Securities Regulation

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  1. Failure to Deliver

Penal, Admin and civil sanctions HOWEVER in reality, there are few penalties according to Lastman

  1. Penal Sanctions
  • Failure to deliver a prospectus may expose the dealer (who would act as principal or agent) to a penal sanction of fine or imprisonment.
  1. Administrative Sanctions
  • Imposed by securities commission or administrator
  • Can include cease trade orders, reprimand or sanction, denial of exemptions, an order directing compliance, restriction on registration.
  1. Civil Sanctions
  • Where the prospectus is not delivered as required, the purchaser has a right of action for (1) rescission (undoing the contract from the beginning) or (2) damages against the dealer who failed to deliver the prospectus.

• This is subject to a limitation periods

o OSA 138(a): 180 days after the date of the transaction that gave rise to the cause of action o In any action other than rescission: 138(b): the earlier of (i) 180 days after P first had knowledge of the facts giving rise to the cause of action or (ii) three years after the date of the transaction that gave rise to the cause of action

  1. Failure to File (likely not needed)

Penal, administrative, and civil sanctions.

1. Penal Sanctions

• Failure to file a prospectus where required, or distributing a security without having obtained a receipt for a prospectus as required can lead to penal sanction of a fine or imprisonment.

2. Administrative Sanctions

Can lead to order that trading in security is ceased until prospectus is filed and receipt is obtained, may lead to denial of exemptions, under OSA may lead to order that a person resign from any position as director/officer of an issuer or be prohibited from becoming or acting as a director or officer of an issuer (s.127(1) paras 8-

8.4), or may also lead to reprimand of registrant or suspension, cancellation, or restriction of a registrant’s registration

3. Civil Sanctions

• Can lead to order that trading in security is ceased until prospectus is filed and receipt is obtained, may lead to denial of exemptions, under OSA may lead to order that a person resign from any position as director/officer of an issuer or be prohibited from becoming or acting as a director or officer of an issuer (s.127(1) paras 8- 8.4), or may also lead to reprimand of registrant or suspension, cancellation, or restriction of a registrant’s registration

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