In a long-awaited decision, the Ontario Securities Commission (OSC) ruled that it is in the public interest to permanently prohibit Conrad Black and John Boultbee, a former executive of Hollinger Inc, from any activity that would enable them to direct or influence the management of a business that is required to comply with Ontario's securities laws. In 2013 OSC staff issued an amended statement of allegations seeking a reciprocal order pursuant to Subsection 127(10) of Ontario's Securities Act, based on findings against Black and Boultbee in concurrent proceedings in the United States.(1)

Black argued against the reciprocal order, seeking to rely on a previous undertaking with the OSC, in which he committed to refrain from participating in certain securities-related activities.(2) However, the OSC ultimately ruled that the misconduct for which Black and Boultbee were convicted in the US proceedings was sufficiently abusive to warrant apprehension of their future conduct, which could be detrimental to the integrity of Ontario's capital markets.(3) As such, the OSC found that it was in the public interest to issue a broad order, which permanently prohibited Black and Boultbee from holding key positions in publicly traded entities in Ontario.


The OSC proceeding began on March 18 2005 with a notice of hearing issued by the OSC against various associates of Hollinger, including Black and Boultbee. The notice of hearing contemplated a hearing to consider whether it was in the public interest for the OSC to make orders relating to certain Hollinger executives as a result of the allegations made against them by OSC staff.

The OSC Staff alleged, among other things, that Hollinger had:

  • diverted funds from its principal subsidiary (Hollinger International Inc) to Hollinger in connection with several sales of community newspaper properties which it owned in the United States;
  • made statements in its continuous disclosure filings which were misleading or untrue;
  • failed to disclose the interests of Hollinger insiders in certain transactions, contrary to the requirements of Ontario securities laws; and
  • failed to adequately disclose and address conflicts of interest with regards to individuals in certain transactions.

Further, the OSC Staff alleged that certain individuals at Hollinger (collectively or individually) had authorised, permitted or acquiesced in Hollinger's alleged misconduct.(4)

The OSC intended to hold the initial hearing in 2007, subject to each of the individual respondents (including Black and Boultbee) executing an undertaking in which they agreed to refrain from:

  • acting or becoming an officer or director of a reporting issuer or affiliated company of a reporting issuer;
  • applying to become a registrant or from being an employee, director or officer of a registrant or an affiliated company of a registrant;
  • engaging directly or indirectly in the solicitation of investment funds from the general public; and
  • trading and acquiring Hollinger securities.(5)

Concurrently, both criminal and civil proceedings had commenced in the United States against various Hollinger executives. As such, the OSC proceeding was adjourned indefinitely pending the resolution of the US proceedings.

The US proceedings concluded with Black being convicted of fraud and obstruction of justice and being sentenced to 42 months of incarceration. Boultbee was sentenced to time already served in prison (329 days) and was fined US$500 and ordered to pay restitution of US$15,000.(6) Further, the civil proceeding, initiated by the US Securities and Exchange Commission (SEC) against Black and other associates (but not Boultbee), concluded on consent of the parties. Black provided a joint written submission consenting to the following terms:

  • an acknowledgement that he was convicted of mail fraud in relation to certain purported non-competition payments that he and others received;
  • consent to the entry of the final judgment which, among other things, prohibited him from acting as a director or officer of certain issuers in the United States; and
  • consent to pay US$4,094,144 in disgorgement and interest.(7)

Following the conclusion of the US proceedings, the OSC proceeding continued with Black and Boultbee as the only remaining respondents. Their undertakings with the OSC remained in force. The OSC issued an amended statement of allegations which relied on Subsection 127(10) of the Securities Act to seek a reciprocal order in Ontario based on the findings in the US proceedings. On June 13 2014 the OSC dismissed a motion by Black requesting a stay of the OSC proceeding against him and provided directions with respect to the scope of evidence that would be permitted at the hearing (for further details see "The Conrad Black saga continues: OSC affirms reciprocal order power").(8) The OSC proceeding, held in October 2014, considered whether the requirements for the issuance of an order pursuant to Subsections 127(1) and (10) of the Securities Act had been satisfied.

Interjurisdictional enforcement and principle of natural justice

For the OSC to make an order in the public interest against a person under Subsection 127(1) of the Securities Act, the circumstances described in one or more of paragraphs 1 to 5 of Subsection 127(10) must apply to the person in question.(9) Further, the OSC is permitted to rely on foreign orders, judgments and settlements under Subsection 127(10) only if such foreign orders, judgments or settlements agree with Canada's concept of natural justice.(10)

Section 127(10) of the Securities Act deals with interjurisdictional enforcement. Paragraphs 1, 4 and 5 of Subsection 127(10) – which were considered in the OSC proceeding – provide as follows:

"127(10) Inter-jurisdictional enforcement - Without limiting the generality of Subsections (1) and (5), an order may be made under Subsection (1) or (5) in respect of a person or company if any of the following circumstances exist:

  1. The person or company has been convicted in any jurisdiction of an offence arising from a transaction, business or course of conduct related to securities or derivatives
  2. The person or company is subject to an order made by a securities regulatory authority, derivatives regulatory authority or financial regulatory authority, in any jurisdiction, that imposes sanctions, conditions, restrictions or requirements on the person or company.
  3. The person or company has agreed with a securities regulatory authority, derivatives regulatory authority or financial regulatory authority, in any jurisdiction, to be made subject to sanctions, conditions, restrictions or requirements."(11)

According to the OSC ruling, paragraph 1 of Subsection 127(10) applied to both Black and Boultbee because the conduct for which they were convicted of offences in the United States related to securities.(12) The OSC determined that paragraph 4 of Subsection 127(10) did not apply because orders arising from the SEC proceeding were mandated by a US district court as opposed to a securities regulatory authority.(13) However, paragraph 5 of Subsection 127(10) did apply, as Black clearly consented to being subjected to sanctions, conditions, restrictions or requirements mandated by the SEC.(14) The OSC also reaffirmed its reasoning in its June decision to conclude that the US proceedings met the Canadian standards of fairness and natural justice.(15)

Public interest mandate and appropriate sanctions

The OSC reviewed whether an order in the public interest was necessary in the circumstances, considering specifically Black's age, his offer to continue to be bound by his undertaking on a voluntary basis and his intention not to become a registrant, an officer or director of a reporting issuer.(16)

The OSC clarified that a restriction on fraudulent and unfair market practices is one of the primary means of achieving the purposes of the Securities Act.(17) As such, limiting restraints on future conduct which related solely to the repetition of one or more specific incidents of misconduct would not achieve those purposes, particularly where the prior misconduct raised fundamental issues of honesty and integrity. The OSC concluded that:

"the misconduct of the Respondents was both serious and carried out in circumstances that warrant apprehension on our part that the future conduct of the Respondents will be detrimental to the integrity of Ontario's capital markets."

As such, appropriate sanctions were necessary to protect the integrity of Ontario's capital markets.

The OSC determined the appropriate sanctions by reviewing, among other considerations, the seriousness of the offences for which Black and Boultbee were convicted, their experience in the marketplace, whether there had been recognition of the seriousness of the misconduct and the need to deter Black and Boultbee and other like-minded individuals from engaging in similar abuses of the capital markets in future.(18)

The OSC stated:

"Black and Boultbee abused their positions of trust as officers and directors to enable the fraudulent conduct for which they were convicted to take place. In our view, the circumstances of this matter demonstrate the need for both specific and general deterrence."(19)

Further, the OSC stated that although it did not consider remorse necessary in determining sanctions in proceedings before the OSC, the failure of both Black and Boultbee to acknowledge the legitimacy of the detailed findings of fraud against them in the US proceedings raised serious concerns with respect to the reliability of their assurances that they posed no threat to Ontario's capital markets.(20)

Accordingly, the OSC ruled that it would be appropriate to prohibit Black and Boultbee from holding positions where they could direct or influence the management of a business that is required to comply with Ontario's securities laws. Black and Boultbee were also ordered to resign from all positions that they held as directors or officers of any issuer, registrant or investment fund manager.(21) The order required that such prohibitions be permanent, as there was no basis for considering that the risk of future misconduct would somehow be circumscribed by the passage of time.(22)


The OSC decision is significant as it provides a precedent on an issue that has been before the OSC for a number of years. The ruling sends a clear message that the OSC will implement its role of preventing misconduct in Ontario's capital markets by looking at past actions, even when those actions have occurred in foreign jurisdictions. Further, the decision demonstrates that the OSC will adopt a broad and purposive approach to its interpretation of the Securities Act in order to protect investors and Ontario's capital markets alike.

For further information on this topic please contact Norm Emblem or Amer Pasalic at Dentons Canada LLP by telephone (+1 416 863 4511) or email ( or The Dentons website can be accessed at


(1) Securities Act, RSO 1990, c S5, s 127(10).

(2) In the Matter of Conrad M Black, John A Boultbee and Peter Y Atkinson (February 26 2015), OSC decision, online OSC at para 70.

(3) Ibid at para 159.

(4) Ibid at para 6.

(5) Ibid at para 10.

(6) Ibid at para 48.

(7) Ibid at para 50.

(8) Re Black et al (2014), OSCB 5847.

(9) Supra note 1, s 127(1), (10).

(10) Supra note 2, at para 86.

(11) Supra note 1, s 127(1).

(12) Supra note 2, at para 107.

(13) Ibid at para 112.

(14) Ibid.

(15) Ibid at para 115.

(16) Ibid at para 116.

(17) Ibid at para 122.

(18) Ibid at para 126.

(19) Ibid at para 147.

(20) Ibid at para 154.

(21) Ibid at para 164.

(22) Ibid at para 163.

Sabrina Serino assisted in the preparation of this update.

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