Securities litigation in 2025: private and public enforcement developments

Material change disclosure

In Lundin Mining Corp. v. Markowich¹, the Supreme Court provided further guidance on the interpretation of “material change” and the leave test for bringing a claim for failure to make timely disclosure, thereby adding to the Supreme Court’s jurisprudence on the related issues of mandatory disclosure and private enforcement in Canadian securities law. Lundin offers important lessons pertaining to the obligation to make timely disclosure of material changes and the risk of civil liability when it is alleged that the obligation has been breached.

Determining the meaning of “material change” remains a two-step test, assessing (a) whether there is a change in the business, operations or capital of the issuer which does not implicate a materiality element such as “importance”; then, (b) whether that change is material. The legislature intentionally left the definitions of “change”, “business”, “operations” and “capital” undefined so that they could be applied flexibly and contextually to a wide range of industries and corporate structures. However, the Court made it clear that there are some important guardrails around the meaning of “material change”:

• While a material fact is static, a material change is dynamic: it compares an issuer’s affairs at two different points in time.
• A change is internal to the issuer. An issuer is not expected to “continually interpret external political, economic and social developments as they affect the affairs of the issuer” but must disclose material changes to its business consequent on such political, economic and social developments.
• While they may indicate some alteration or shift within the issuer, without more, routine matters, negotiations, or internal deliberations will not likely amount to a change for disclosure purposes.

Whether a material change has, in fact, occurred will often be apparent to issuers given their industry knowledge and familiarity with the company. The Court held that the materiality requirement of the two-step test should avoid burdening issuers with the obligation to evaluate every minor internal event as a material change, nor result in overabundant disclosure. Finally, the analysis of whether a “material change” has occurred is assessed no less stringently when a party is seeking leave to bring an action under the Securities Act than at later stages in a case. The party seeking leave must provide a plausible application of the legislation to the facts that are available at the leave stage.

Whether Lundin significantly affects disclosure decisions—increasing the amount of material change disclosure—and whether it affects civil (or regulatory) litigation risk remains to be seen after issuers absorb the implications of the decision.

Registrants as gatekeepers

It is an important part of the regulation of registrants that they perform a gatekeeper function, serving as protectors of capital markets. One panel of the Canadian Investment Regulatory Organization (CIRO) noted in a 2025 case that registrants provide a gateway to capital markets and that the gatekeeping function is an important one that includes an obligation to detect and prevent abusive trading conduct. A registrant may face CIRO enforcement when the performance of the gatekeeping function falls short.

In Englesby and Nishimura², CIRO staff filed an application for review by the British Columbia Securities Commission (BCSC) of a CIRO panel’s decision dismissing a disciplinary action brought against two registered individuals alleging that they failed to comply with gatekeeper obligations. The CIRO panel had found that there was no evidence that the respondents had breached their gatekeeper obligations as alleged by CIRO staff; however, BCSC found that the panel erred in determining what triggered a registrant’s duty to make client inquiries.

The CIRO panel had found that if an advisor becomes aware of client trading activity that appears out of the ordinary but concludes that there is a possible reasonable explanation based on their experience, then the advisor’s gatekeeper obligations may have been fulfilled. In contrast, BCSC found that it was not appropriate for registrants to rely on possible, hypothetical explanations to fulfil a gatekeeper concern. Instead, registrants need to make reasonable inquiries of their clients and take reasonable steps based on the information gathered in response to those inquiries. BCSC directed that the proceeding be remitted back to the CIRO panel to decide the matter with the benefit of BCSC’s guidance.

BCSC also made clear in Englesby and Nishimura that registrant gatekeeping obligations are broad: they are not limited to a specific set of circumstances or areas of the industry. A different CIRO panel in late 2025 confirmed this view, while again holding that the respondents had not breached their obligations. With respect to the market-protecting role, CIRO noted in its 2025 Re Hildebrandt decision that the gatekeeper function is central to public enforcement of securities law³. It is:

… an example of principles-based regulation. [The applicable CIRO rules do] not provide a check list of specifically prescribed things a registered person must or must not do. Instead, [the rules impose] on registered persons a positive obligation to ensure the transactions they facilitate are ethical or do not otherwise harm the integrity and credibility of capital markets. In addition to requiring personal honesty from Registered Representatives, this obligation places them under a duty to assess whether the things their clients ask them to do are consistent with the public interest⁴.

Regulatory enforcement powers

The power to compel the production of documents is a fundamental enforcement power of provincial securities regulators in pursuit of their public enforcement mandate. Recent decisions of provincial securities tribunals have focused on the ability of regulators to obtain documents through the exercise of enforcement powers.

In Binance Holdings Limited v. Ontario Securities Commission (Binance)⁵, the Court of Appeal for Ontario provided limitations on the exercise of the compelled document-production power.

Ontario Securities Commission (OSC) staff obtained an order issued under section 11 of the Securities Act appointing investigators to investigate allegations of conduct by Binance—which operates an online crypto asset trading platform—contrary to Ontario securities laws or to the public interest. One of the appointed staff issued a summons to Binance under section 13 of the Securities Act, which included a demand (known as the Document Request):

For the period of January 1, 2021 to present, provide all communications regarding Ontario (or Canada generally) among directors, officers, employees, contractors, agents and consultants of Binance Holdings Limited and related entities⁶ .

Binance argued that the summons contravened section 8 of the Charter, which provides “the right to be secure against unreasonable search or seizure”, on grounds which included the unlimited scope of the Document Request.

In concluding that the Document Request did contravene section 8 of the Charter, the Ontario Court of Appeal made the following key findings:

• An enforceable demand for production of business records made by state agents is a “seizure” within the meaning of section 8.
• The holder of business records has a reasonable expectation of privacy in the business records that are targeted by the seizure, but this reasonable expectation of privacy is low.
• Even where there is a “very low expectation of privacy”, the ability of regulators to compel the production of documents and information is limited to terms that are fair and reasonable.
• The power of an investigator to issue a production order under section 13 is limited to documents that may be relevant to an inquiry that is properly undertaken pursuant to the Securities Act. A seizure that purports to compel the production of documents in the absence of a reasonable foundation to believe they may be relevant is therefore overbroad and unreasonable, contrary to section 8.
• The Document Request demanded production, without limitation, of all communications between virtually anyone that may have managed, been employed by, or done work for Binance or its related entities over a two-and-a-half-year period relating not only to Ontario but to all of Canada, regardless of the subject matter of those communications. The request was considered “staggering in its breadth and … made without apparent concern about the relevance of what was being demanded, beyond mere speculation that there could be something relevant that would otherwise be missed” and was therefore declared unconstitutionally overbroad.

Another 2025 decision further shapes the exercise of document-compulsion enforcement powers by provincial securities regulators. In Re Birdsall⁷, the British Columbia Securities Commission rejected a constitutional challenge to public enforcement powers on the basis that regulatory sanctions for failing to produce documents amount to punishment—analogous to a contempt order—of a kind not available to provincial legislatures. The challenge was rejected, with BCSC finding that the imposition of regulatory sanctions for failing to comply with a demand for documents is meaningfully distinct from the contempt powers of superior courts. While contempt and sanctions for non-compliance both depend on concepts of the public interest, the public interest engaged in the regulatory context is grounded in securities legislation and its purposes, making it preventive, not punitive, in nature.