On December 2, 2009, a panel of the Commission heard submissions in camera on a motion for an order under s. 17(1) of the Securities Act (the “Act” ), permitting a foreign securities regulator to disclose to a foreign criminal law enforcement agency certain compelled documents relating to two account holders of a Bank (the Bank was not named in the decision). The documents were provided to the foreign securities regulator pursuant to a s. 11 Order.
The Bank in question was notified of the motion by Staff of the Commission and objected to the making of the proposed order without notice being provided to the two account holders, whose documents would be provided to the foreign criminal law enforcement agency. In ordering that notice of Staff’s motion and an opportunity to be heard should be provided to the two corporate account holders; the Commission noted that s.17(2)(a) of the Act requires that reasonable notice of an application under s. 17(1) must be provided to “persons or companies named by the Commission”. The Commission held that although the s.13 summons was directed to the Bank and the documents were produced by the Bank, the two corporate account holders were “named by the Commission in the summons” and therefore notice and an opportunity to be heard had to be provided to them.
Following the issue of the Panel’s confidential reasons and order on March 25, 2010, the Executive Director brought an application to vary the order pursuant to s. 144 of the . The Executive Director submitted that the Panel improperly balanced the importance of the Bank’s obligation to its account holders against the importance of Canadian authorities cooperating with American authorities when determining whether notice to the account holders was necessary. This submission was rejected by the Commission which held that it would be contrary to the intention of the Act and to the public interest to allow the Executive Director’s Application.
Although it has been reported that this decision stands for the proposition that third parties must always be put on notice pursuant to s.17(1) of the Act in situations where their records are being produced to foreign criminal law enforcement agencies, the decision is not that broad and turns specifically on the fact that the third parties in this instance were named in the s.13 summons.