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Alberta Securities Commission: Securities Act Confidentiality Provision Ruled Constitutional

Date 18/05/2019

Justice B. Millar of the Court of Queen’s Bench of Alberta has rejected a constitutional attack against section 45 of the Securities Act (Alberta) (the Act), which provides that anything acquired and all information or evidence obtained pursuant to an investigation is confidential and shall not be divulged subject to certain exceptions.

In 2017, Alberta Securities Commission Staff issued a Notice of Hearing alleging that Kilimanjaro Capital Ltd. and six individuals, including John Charles Zang, were involved in a market manipulation scheme. Mr. Zang then filed an application challenging the constitutionality of section 45 of the Act on the basis that it infringed his freedom of expression and his right to liberty or security of the person contrary to sections 2(b) and 7 of theCharter.

The Court dismissed the section 7 claim on the basis that there was no evidence of a causal connection between section 45 of the Act and a loss of Mr. Zang’s liberty or security of the person. For the section 2(b) claim, Justice Millar found that the confidentiality requirements under section 45 are a justifiable limitation upon expression within the context of a securities investigation. Persons voluntarily participate in the securities market for profit, understanding that it is a highly regulated industry, and securities laws are in place to protect the public interest and to foster confidence in the capital markets. Confidential investigations are an integral part of these protections, and any impairment of Charter rights is minimal given the purpose of the legislation.

Justice Millar also dismissed additional claims of unconstitutionality, finding that Mr. Zang had not met the burden of proof to establish any breaches.

A copy of the court transcript can be obtained through the Court of Queen’s Bench of Alberta.

The ASC is the regulatory agency responsible for administering the province's securities laws. It is entrusted to foster a fair and efficient capital market in Alberta and to protect investors. As a member of the Canadian Securities Administrators, the ASC works to improve, coordinate and harmonize the regulation of Canada's capital markets.