The Ontario government is strengthening protection for people who invest in the stock market.

Beginning Dec. 31, 2005, secondary market investors will have a statutory right to sue public companies that operate in Ontario’s capital markets for misleading disclosure and failure to make timely disclosure.

“Implementing civil liability for secondary market investors – where over 90% of shares are bought and sold – is the right thing to do,” said Gerry Phillips, Minister of Government Services and Minister responsible for securities regulation, in a release. ” Ontario is the first Canadian jurisdiction to implement civil liability for secondary market investors.

Under the Ontario Securities Act, primary market investors – where shares are made available through an initial public offering — already have a statutory right to sue if disclosure information is false or misleading.

“Public companies will have even stronger incentives to disclose accurate and complete information, and investors will have broader remedies to hold them accountable if that information is false, misleading or untimely,” said Tom Allen, former chair of the Toronto Stock Exchange Committee on Corporate Disclosure. “This is a landmark in ensuring confidence in Ontario’s capital markets.”

Implementing civil liability is one of the recommendations from the Ontario legislature’s all-party Standing Committee on Finance and Economic Affairs (SCFEA), which tabled its report on the Five Year Review of the Securities Act in the legislature October 18, 2004.
http://www.newswire.ca/en/releases/archive/August2005/02/c6383.html