Securities litigation in Canada continues to be informed by changes in both civil and regulatory law. It is important for businesses to stay informed of changes to limit their exposure to potentially contentious matters before they escalate and be prepared for when they are unavoidable.

Below are the key legal developments and trends businesses should keep in mind in 2023.

1. Securities Enforcement Reform. Initiatives to modernize securities enforcement continue. Certain recommendations, including enforcement-related changes, were implemented in Ontario in 2022 through the new Securities Commission Act.

2. New Self-Regulatory Organization. The Canadian Securities Administrators (CSA) launched a new self-regulatory organization (SRO) on December 31, 2022, to develop a more harmonized rulebook for both investment and mutual fund dealers. The SRO, implemented on January 1, 2023, consolidates the functions of both the Investment Industry Regulatory Organization of Canada and the Mutual Fund Dealers Association of Canada. The SRO will likely continue to prioritize initiatives such as reforms to protect elderly and vulnerable clients from financial exploitation.

3. Forum Shopping. Recent amendments to the Ontario Class Proceedings Act (CPA) have given rise to “forum shopping,” and an increasing number of Ontario-based counsel are bringing securities class actions in other provinces, primarily B.C. and Quebec. While claims may be filed in more than one province, plaintiffs’ counsel usually prefer to actively prosecute in Quebec when the defendant’s head office is in the province. This is due to jurisdictional limitations otherwise preventing them from representing a national class before Quebec courts.

4. B.C. Not a Haven. In a related trend, several recent B.C. decisions, including judgments in common issues trials, reveal that B.C. may not ultimately prove to be a haven for Canadian securities class actions. B.C. courts are carefully scrutinizing securities class-action claims at the pre-certification, certification and common-issues trial phases.

5. Increase in ESG Litigation. ESG compliance is getting more complex and expansive than ever. These issues commonly intersect with securities litigation in the context of both public disclosure statements and director/officer claims. These types of claims are expected to expand further as mandatory ESG reporting becomes more commonplace in Canada, the U.S. and beyond.