The Supreme Court of Canada will not be hearing an appeal to consider the standard for securities regulators to obtain a receiver amid concerns about possible misconduct.
The court denied leave to appeal that was sought by a real estate investment manager, Cacoeli Asset Management Inc., which has challenged the appointment of a receiver over its business that was sought by the Ontario Securities Commission (OSC) after the regulator began investigating a complaint into the firm’s business.
The Ontario Superior Court of Justice granted the OSC’s request to appoint a receiver to oversee the assets and operations of Cacoeli and various related companies as it explored an allegations that funds raised from investors to finance certain real estate projects had been diverted to different projects.
The regulator hasn’t made any formal enforcement allegations in the case.
The firm challenged the receiver’s appointment arguing, among other things, that the regulator must have “strong prima facie evidence” that securities law violations have occurred in order to justify a court-ordered receivership.
The court rejected the firm’s challenge, finding that a regulator only has to establish that it has a “serious concern” about possible regulatory violations to get a receiver appointed — and that decision was upheld by the Court of Appeal for Ontario.
Now, the Supreme Court has also dismissed the firm’s request for leave to appeal the issue to the high court.