Liability for insider trading, informing and recommending and for front running
2007, c.38, s.168
157(1)The following definitions apply in this section.
“issuer” means an issuer as defined in subsection 147(1). (émetteur)
“person in a special relationship with an issuer” means a “person in a special relationship with an issuer” as defined in subsection 147(1).(personne ayant des rapports particuliers avec un émetteur)
157(2)Every person in a special relationship with an issuer who contravenes subsection 147(2) is liable to compensate the other party to the transaction described in that subsection for damages as a result of the transaction unless the person in the special relationship with the issuer proves
(a)
that the person reasonably believed that the material fact or material change had been generally disclosed, or
(b)
that the material fact or material change was known or ought reasonably to have been known to the other party to the transaction.
(b)
person in a special relationship with an issuer, and
(c)
person who proposes to make a take-over bid, as defined in section 106, for the securities of an issuer, to become a party to a reorganization, amalgamation, merger, arrangement or similar business combination with an issuer or to acquire a substantial portion of the property of an issuer,
and who informs another person of a material fact or material change with respect to the issuer that has not been generally disclosed is liable to compensate for damages any person who after that time sells securities of the issuer to or purchases securities of the issuer from the person who received the information.
157(4)Subsection (3) does not apply if
(a)
the person who informed the other person proves that the informing person reasonably believed the material fact or material change had been generally disclosed,
(b)
the material fact or material change was known or ought reasonably to have been known to the seller or purchaser, as the case may be,
(c)
in the case of an action against an issuer or a person in a special relationship with the issuer, the information was given in the necessary course of business, or
(d)
in the case of an action against a person referred to in paragraph (3)(
c), the information was given in the necessary course of business to effect the take-over bid, business combination or acquisition.
157(4.1)Every issuer and every person in a special relationship with an issuer who contravenes subsection 147(4.1) is liable to compensate the person who received the recommendation or encouragement described in that subsection for damages as a result of the recommendation or encouragement unless the person who made the recommendation or gave the encouragement proves
(a)
that, at the time of the making of the recommendation or giving of the encouragement described in subsection 147(4.1), the person who recommended or encouraged reasonably believed the material fact or material change had been generally disclosed, or
(b)
that the material fact or material change was, at the time of the making of the recommendation or giving of the encouragement, known or ought reasonably to have been known to the person who received the recommendation or encouragement described in subsection 147(4.1).
157(4.2)A person who knows of material order information and contravenes subsection 147.2(2) or (3) is liable to account to the person to whom the material order information relates for any benefit or advantage received or receivable by the first person by reason of the contravention.
157(5)Any person who has access to information concerning the investment program of a mutual fund in New Brunswick or the investment portfolio managed for a client by an adviser and uses that information for the person’s direct benefit or advantage to purchase or sell securities of an issuer for the person’s account is accountable to the mutual fund or the client of the adviser for any benefit or advantage received or receivable as a result of the purchase or sale, if the portfolio securities of the mutual fund or the investment portfolio managed for the client by the adviser include securities of that issuer.
157(6)Every person who is an insider, affiliate or associate of an issuer who
(a)
enters into a transaction described in subsection 147(2) with knowledge of a material fact or material change with respect to the issuer that has not been generally disclosed,
(b)
informs another person, other than in the necessary course of business, of a material fact or material change with respect to the issuer that has not been generally disclosed, or
(c)
with knowledge of a material fact or material change with respect to the issuer that has not been generally disclosed, recommends or encourages another person to enter into a transaction described in subsection 147(4.1),
is accountable to the issuer for any benefit or advantage received or receivable by the person as a result of the transaction, information provided, recommendation or encouragement, as the case may be, unless the person proves that the person reasonably believed that the material fact or material change had been generally disclosed.
157(7)Where more than one person in a special relationship with an issuer is liable under subsection (2), (3) or (4.1) as to the same transaction or series of transactions, their liability is joint and several.
157(8)In assessing damages under subsection (2), (3) or (4.1), the court shall consider,
(a)
if the plaintiff is a purchaser, the price paid by the plaintiff for the security less the average market price of the security in the 20 trading days following general disclosure of the material fact or material change,
(b)
if the plaintiff is a vendor, the average market price of the security in the 20 trading days following general disclosure of the material fact or material change less the price received by the plaintiff for the security, and
(c)
any other measure of damages the court considers relevant in the circumstances.
157(9)For the purposes of this section, a security of the issuer shall be deemed to include
(a)
a put, call, option or other right or obligation to purchase or sell securities of the issuer, or
(b)
a security, the market price of which varies materially with the market price of the securities of the issuer.
2007, c.38, s.169; 2008, c.22, s.43