Steps – Securities Regulation

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4.6.2.1 Trading

  1. Are you a person or company in a special relationship with a reporting issuer?

a. Special relationship: (a) insider, affiliate or associate of: the reporting issuer, a person

proposing to make a takeover bid, person proposing to become part of a reorganization, amalg, etc.; (b) a person (or co) engaging in or proposing to engage in business on behalf of reporting issuer or a person described in abc, (c) director, officer, employee of reporting issuer or of person making takeover bid, reorganizing, or engaged in business, (d) person or co who learned of mat fact or change while they were person in abc, or (e) person or co who learns info from any other person described in the section (in a special rel/ship) and knows or reasonably ought to have known that the person they learned it from was in a special relationship

  1. Are you trading (buying/selling)?
  2. Are you doing so with knowledge of a material fact OR change (covers both!) that has not been generally disclosed?
  3. Generally disclosed: question of fact
  4. Reverse Onus: Onus on defendant to show that they believed it was generally disclosed (76(4))
  5. Cannot disclose and then trade right away, must be effective disclosure (Texas Gulf)
  6. When market knows and has had time to digest (“reasonableness”) (National Sea)

iv. Safe rule is one trading day (National Sea)

  1. If you are in a special relationship and traded with knowledge of a material fact OR change (covers both!) that has not been generally disclosed, do you have a valid defence? (175 of regs)
  2. That it was generally disclosed (or that you reasonably believed it was) (76(4))
  3. *if you’re deemed to have knowledge b/c you’re an employee, partner, directors, etc. in a company that had the information, can show that you protected integrity of the information (REGS 175)
  4. If you’re trading as an agent (broker) for someone else (and you DID NOT give the info out to that principal) (175(2)(a))
  5. If they were purchased as part of an automatic reinvestment plan (175(2)(b))
  6. If they were traded b/w two people who both knew the information (175(2)(c))
  7. Are you a person or company in a special relationship with a reporting issuer? If not…

a. See def of special relationship above

  1. Did you learn information from someone that you knew or ought to have known was in a special relationship? (76(5)(e) – puts you in a special relationship)
  2. Did you share a material fact or change that has not been generally disclosed with anyone else not in the ordinary course of business?
  3. Material fact or change
  4. Generally disclosed
  5. Not in the ordinary course of business

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