Securities Class Actions Move North: A Doctrinal and Empirical Analysis of Securities Class Actions in Canada

Abstract

A number of Canadian provinces recently have adopted legislation providing shareholders with a claim for secondary market fraud. Although the legislation has some similarities to the “fraud on the market” class action found in the United States, the laws have some important differences. This article compares securities class actions in Canada and the United States, highlighting the differences between the two regimes that are likely to have important strategic consequences for class action attorneys and issuers. The article also collects and analyzes data on the securities class actions that have been filed to date against Canadian issuers in both Canada and the US, sometimes simultaneously. Finally, the article analyzes the effect of the new legislation on premia for directors’ and officers’ insurance. We find that the relative price of D&O insurance went up substantially for issuers listed only in Canada after the legislation went into effect.

Keywords: Ontario Securities Act, Supreme Court of Canada, director and officer insurance

JEL Classification: K22