The Future of Securities Class Actions in Canada: A Comment on the Article of Philip Anisman and Garry Watson

• Author: Joseph Groia, Karen Danielson, and Michael Zogala
• Pages: 527-540

527

THE FUTURE OF SECURITIES CLASS

ACTIONS IN CANADA:

A COMMENT ON THE ARTICLE OF PHILIP

ANISMAN AND GARRY WATSON1

Joseph Groia, Karen Danielson, and Michael Zogala2

The truth is rarely pure and never simple.

– Oscar Wilde, The Importance of Being Earnest

A. INTRODUCTION

In their article “Some Comparisons between Class Actions in Canada and the

U.S.: Securities Class Actions, Certifications, and Costs,” Philip Anisman

and Garry Watson outline the parameters of, and critique the recent

changes to, the statutory civil liability securities law regime in the prov-

ince of Ontario. These revisions to the Ontario Securities Act,3 commonly

referred to as Bill 198, came into effect 31 December 2005 and were, at

least in part, intended to redefine investors’ recourse for secondary mar-

ket corporate disclosure violations.

Proponents of Bill 198 maintain that it provides Ontario shareholders

with a viable mechanism to launch class action lawsuits against compa-

nies whose secondary market stock prices are affected by misrepresen-

tations (or non-disclosures) made by those companies or certain other

parties. They also assert that the system of checks and balances embed-

ded in the legislation empowers the judiciary to shield companies from

frivolous U.S. style “strike suits.”4 However, critics of the legislation decry

1 This paper is a response to Philip Anisman & Garry Watson’s article, “Some

Comparisons between Class Actions in Canada and the U.S.: Securities Class

Actions, Certifications, and Costs,” published in this collection.

2 Joseph Groia is a principal of Groia & Company Professional Corporation,

Toronto; Karen Danielson is counsel at the Investment Dealers Association of

Canada; Michael Zogala is a law student at Osgoode Hall Law School, Class of

2007.

3 Securities Act, R.S.O. 1990, c. S.5 [OSA].

4 A strike suit is defined as a “shareholder derivative action begun with [the] suit is defined as a “shareholder derivative action begun with [the]

hope of winning large attorney fees or private settlements, and with no inten-