Insider trading cases are often circumstantial in nature. Fiorillo v Ontario Securities Commission, 2016 ONSC 6559 is no different. In a very lengthy decision, the findings of the Commission were upheld. The circumstantial evidence included a pattern of telephone calls between a person with access to material non-public information and those that bought the securities shortly after the calls. There were other factors that supported the inference, such as attempts to conceal the true person behind the trades. The Court upheld that findings can be based on circumstantial evidence where it is sufficiently compelling.
The Court commented on a number of other issues. For example, it said that there is a low threshold of fairness for beginning an investigation or in compelling a practitioner to undergo an interview both in terms of grounds to initiate the process and in terms of disclosure given in advance of the examination.
The Court also said that hearsay evidence is admissible in regulatory proceedings (unless the statute says otherwise) and the reading in of the transcript of the mandatory interview of a witness was upheld even though that meant the other practitioners could not cross-examine the witness. In that case, both parties appeared to have equal access to the witness to summons them to the hearing for questioning, if wanted. Each side wanted the other to call the witness so that they could cross-examine her. However, it appeared that the witness was, in fact, adverse to the prosecution and not adverse to the practitioners in that she denied participating in the alleged wrongdoing. So the Court did not see any duty on the prosecution to call the witness in person.
The Court also upheld an order to pay about 11% of the total costs even though the costs included concerns that had not been established and even though the $300,000 ordered was more than the prosecution had requested. The Court indicated that significant deference should be given to costs orders.
Another recent securities commission case that discusses and applies the concepts of circumstantial evidence and making inferences is: Finkelstein v Ontario (Securities Commission), 2016 ONSC 7508.