Capital Markets Tribunal highlights importance of precision in requests for additional disclosure

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In Cormark Securities Inc (Re),[1] a panel of the Capital Markets Tribunal (CMT) dismissed a motion requesting additional disclosure on the basis the request was not sufficiently clear. The decision highlights the importance of precision and a respondent’s burden to establish a clear connection between the documents requested and the specific allegations against them when requesting additional disclosure.


On December 7, 2020, the Ontario Securities Commission (the OSC) issued an order under section 11 of the Securities Act (the Act) authorizing an investigation into various trading-related matters. The section 11 order was subsequently amended, expanding the scope of the authorized investigation.

Following the investigation, OSC Staff issued a Statement of Allegations [PDF] on November 9, 2022, alleging that Cormark Securities Inc. (Cormark), William Jeffrey Kennedy (Cormark’s head of equity capital markets) and their client Marc Bistricer, acting through Saline Investments Ltd. (Saline), engaged in an illegal and abusive short-selling scheme that violated Ontario securities law.

Staff provided Bistricer with three sets of disclosure. Following the disclosure, Bistricer asked Staff whether all documents in Staff’s possession in relation to the section 11 order — in particular, in relation to their investigation into short selling in advance of public offerings and private placements — had been disclosed to Bistricer. In response, Staff confirmed that there were documents that had not been disclosed, stating they were not relevant to the allegations against him.

On February 24, 2023, Bistricer brought a motion seeking an order directing Staff to make additional document disclosure.

The decision

In their reasons for dismissing Bistricer’s motion, the CMT addressed two issues:

  1. whether Bistricer’s request for disclosure was sufficiently clear
  2. whether Bistricer was entitled to the disclosure that he sought from Staff

Sufficiently clear request for disclosure

On the first issue, the CMT found that Bistricer had formulated his request for disclosure in three different ways:

  • First, in Bistricer’s notice of motion, the request was framed as “all documents in Staff’s possession which pertain to any transactions that have similarities to the transactions at issue in this matter, which would include short sales, private placement and/or the securities lending agreement.”
  • Second, in Bistricer’s written submissions, the request was for documents that are “of the same type” as those referenced in the Statement of Allegations.
  • Third, in oral submissions, the request was for disclosure of everything Staff received pursuant to the section 11 order, including all documents, transcripts of examinations or notes from examinations where no transcripts exist — the broadest formulation of his request.

The CMT held that terms used in Bistricer’s requests, such as “similarities” and “same type”, in addition to effectively creating three distinct requests, were imprecise and too vague to form the basis of an order that would allow Staff to determine what documents were captured. Any order made by the CMT must be clear and definitive, and allow the subject of the order — in this case, Staff — to comply.

The CMT therefore concluded that Bistricer’s disclosure request was too unclear to form the basis of a disclosure order.

Entitlement to disclosure

Turning to the second issue, the CMT addressed whether Bistricer, giving his request the most generous meaning, would have been entitled to the disclosure sought.

The CMT began by reviewing Staff’s disclosure obligation, outlined in Rule 27(1) of the Capital Markets Tribunal Rules of Procedure and Forms. Rule 27(1) requires Staff to disclose “copies of all non-privileged documents in Staff’s possession that are relevant to an allegation.” The threshold for relevance is low, and Staff must

  • include documents beyond what they intend to rely on that might reasonably assist a respondent in making full answer and defence
  • assess relevance in the context of the specific allegations
  • reasonably anticipate defences or issues that a respondent might raise
  • include inculpatory and exculpatory documents
  • err on the side of inclusion

The respondent making the disclosure request has the burden of articulating the request, and must establish a sufficient connection between their ability to make full answer and defence and the documents they are requesting.

Assessing whether Bistricer was entitled to the disclosure sought engaged three sub-issues:

  1. whether the existence of an allegation that is not tied to a specific contravention of Ontario securities law changes the nature of Staff’s disclosure obligation
  2. whether evidence of general practice in the market is relevant to the allegations in the section 11 order
  3. whether Staff has an obligation to disclosure all the material obtained pursuant to a section 11 order

The CMT held that an allegation that conduct was contrary to the public interest does not, on its own, broaden the scope of documents are considered relevant to a respondent. The CMT stated that “[t]here is nothing inherent in a public interest allegation that makes broad disclosure of information unrelated to the specific respondents and their alleged conduct automatically relevant.”

Addressing whether evidence of general practice in the market was relevant to the allegations, the CMT stated that the respondents’ conduct is to be assessed on a standard of whether it was abusive or engaged the animating principles of the Act. The actions of other market participants, and the frequency of those actions, are not relevant to a determination of whether those criteria are met. There is therefore no basis to order Staff to disclose information related to general market practice.

Finally, the CMT held that Staff’s disclosure obligation does not go as far as requiring disclosure of everything obtained pursuant to a section 11 order, stating that it “does not follow from the fact that Staff obtained information in an investigation that the information is automatically relevant to the allegations.” That was especially true in this case, where the Statement of Allegations related only to a subset of the matters investigated. The CMT rejected Bistricer’s argument that Staff must disclose documents obtained during the investigation as the investigation was part of the proceeding, holding that an investigation does not form part of a proceeding.

On the second issue, the CMT concluded that, giving Bistricer’s request the most generous meaning, he was not entitled to the requested disclosure.

Key takeaways

The decision in Cormark emphasizes that when asking for additional disclosure from Staff in the context of a contested enforcement proceeding, respondents must specify the relevant link between the requested documents and the specific allegations made against them, and frame their request in a manner that would allow the CMT to issue an order with which Staff would be able to comply.

The scope of the requirement for a respondent to state their request with precision may become clearer with subsequent decisions. It is certainly conceivable that it will present difficulties for respondents, particularly where the documents sought were obtained by Staff from third parties. Respondents must demonstrate that the requested material is necessary and appropriate to enable it to prepare and present an adequate defence, rather than a “fishing expedition.”

[1] Cormark Securities Inc (Re), 2023 ONCMT 23.