Dispute arose over sharing of data in laptop, phone, software subscriptions
In a securities matter, the Ontario Superior Court of Justice curtailed the receiver’s role due to the work done and the level of distrust, but allowed it to continue acting as the custodian of the data and intermediary for production.
In Ontario Securities Commission v. Traders Global Group Inc., 2025 ONSC 4510, the Ontario Securities Commission (OSC) started investigating certain respondents for potential fraud under s. 126.1(1)(b) of Ontario’s Securities Act, 1990.
A November 2022 request for assistance from the United States Commodities Futures Trading Commission (CFTC) sparked this investigation. In January and April 2023, the OSC sought and obtained orders under s. 11 of the Securities Act to advance its investigation.
The CFTC filed a complaint with the United States District Court for the District of New Jersey to seek civil monetary penalties, injunctive relief, and other equitable relief against certain respondents and a related entity in New Jersey. This proceeding involved the appointment of a temporary receiver in the US.
The OSC decided to wait and let the CFTC proceeding unfold. It then embarked on steps to appoint a receiver in Ontario.
The Ontario Superior Court appointed Grant Thornton Limited as receiver over all the respondents’ assets, undertakings, and properties under ss. 126 and s. 129 of the Securities Act.
Under its mandate, the receiver secured and preserved data imaged from a laptop and a cellphone and contained in Office 365 subscriptions owned by some respondents. The receiver did not review the data, which could include materials protected under the solicitor-client privilege.
The receiver and the respondents negotiated and formalized a privilege protocol, which would allow the respondents to identify solicitor-client privileged material within the data collected and protect that information from the receiver’s access. A dispute arose over whether the receiver could share with the OSC non-privileged data it possessed.
In a disclosure motion, the receiver asked the court for advice and directions on the point of contention. The receiver also wanted the court to interpret the scope of paragraph 5(q) of the appointment order regarding its ability to share with the OSC the data it obtained under its mandate.
The OSC alleged that it was waiting to gain access to the data, which would advance its investigation and initial analysis, enable it to offer reliable estimates, and help it decide whether to bring enforcement proceedings against the respondents in Canada.
The Ontario Superior Court of Justice interpreted paragraph 5(q) to include documents where it authorized the receiver to share with the OSC information, including that belonging to identifiable individuals, that it acquired and controlled.
The court invited the respondents to specify the rights or protections that might flow from using a summons to obtain the data. The court noted that the OSC said it would consider including language in any order authorizing the data’s disclosure that would reflect those rights or protections.
The court encouraged the parties to develop a protocol to enable the assertion and pursuit of those protections. The court noted that the protocol could allow the respondents to escalate their concerns before the OSC. The court said it would impose a protocol if the parties could not agree on its terms.
Apart from the $10 million escrow fund, the court directed the retention of an additional $500,000 fund to cover the receiver’s future and ongoing expenses.
