Accordingly, determinations made by the ASC in that regard should not be overturned on appeal unless they are unreasonable.Section 147(3.1) of the provides that it is illegal to recommend or encourage others to trade in securities of an issuer before a material fact concerning that issuer is generally disclosed.
Generic positive statements about an issuer, for example, will generally not give rise to a violation of section 147(3.1) of the .The Court allowed the appeal of two of the appellants, including Holtby, who were found to have engaged in improper recommending/encouraging, on the basis the evidentiary record did not support a conclusion that they conveyed information with the expectation that the recipient would use that information to trade in Eveready shares.The Court and the ASC both acknowledged that it is often only possible to prove illegal insider trading with reference to circumstantial evidence, and the Court agreed that the ASC may, in appropriate circumstances, determine that a person has engaged in illegal insider trading based upon that person's conduct and trading activity, for example. The focal points of the ASC's leave application concern the evidence necessary to prove allegations of illegal insider trading, tipping and recommending/encouraging, and the sanctions that may be imposed by the ASC on persons found to have engaged in such conduct.Commentators have suggested that, if the Court's decision in stands, the ASC's ability to prosecute future insider trading cases will be adversely affected, particularly where an individual is alleged to have recommended that another person purchase or sell securities or encouraged that person to do so. At the time, Eveready was a reporting issuer whose shares were listed on the Toronto Stock Exchange.
The proceedings in arose out of the takeover of Eveready Inc. By late 2008, Eveready's share price had declined significantly from prior highs, leading Clean Harbors to initiate discussions with Eveready personnel concerning a business combination (in late October 2008) and ultimately make a proposal to acquire Eveready (in April 2009).Bert Holtby became aware of the Eveready/Clean Harbors discussions in his capacity as a director of Eveready.The ASC determined that those discussions represented a "material fact" for purposes of the In total, the ASC determined that five individuals had engaged in illegal insider trading, tipping or recommending/encouraging (or a combination of those offenses).The sanctions imposed by the ASC included trading bans, disgorgement of profits and administrative monetary penalties ranging from ,000 to .75 million.The Court overturned the ASC's findings of culpability with respect to three individuals and ordered that the sanctions imposed on two individuals, including Holtby, be remitted to the ASC for reconsideration.In reaching its conclusions, the Court determined that: The Court acknowledged that the ASC is an expert tribunal and is entitled to deference in interpreting its "home" statute.