Oct 21, 2021
A recent decision from the Québec Court of Appeal, Langford Sharp c. Autorité des marchés financiers, clarified that the province’s Financial Markets Administrative Tribunal (FMAT) has jurisdiction in a case of an alleged transnational stock price manipulation scheme involving offshore companies outside Québec. The Court confirmed that the FMAT could hear an action brought against the appellants under the Québec Securities Act regarding the “pump and dump” scheme as there was a “real and substantial” connection with the province. Various press releases issued in Montréal promoted a mining venture based in the province in which the appellants allegedly held stock, and pointed to industry incentives and favourable policy in Québec.
Osler partner Fabrice Benoît, a securities and commercial litigator in the firm’s Montréal office, says of the decision, “this is probably the first detailed decision on the subject [of FMAT jurisdiction] here in Québec.” As a result, he says, “we now have the highest court in Québec confirming the issue of jurisdiction, which is important to our securities law world.”
Quentin Montpetit, an associate in Osler’s Litigation group also based in Montréal, points out that the decision confirms that as the alleged operation had the province as its “face,” the tribunal would have jurisdiction in such cases.
“It doesn’t necessarily need to be grounded in material action in Québec or prove there are or are not victims based in Québec, as long as Québec society and the Québec market is used and presented in a way to influence the market,” he explains.
While acknowledging that the decision was not based on the merits of the case, Fabrice and Quentin note that the Court stressed FMAT’s role in protecting investors and ensuring public confidence in the province’s securities market.
“The Court of Appeal reasoning is that the Québec securities regulator has the mandate to protect the public interest and ensure the safety of Québec securities market and public confidence in this market as well,” Quentin says.
Read Zena Olijnyk’s full article, “Quebec court confirms tribunal jurisdiction on transnational 'pump and dump' case linked to province,” on the Canadian Lawyer website.