An Act to amend the Criminal Code (capital markets fraud and evidence-gathering) (S.C. 2004, c. 3)

Assented to 2004-03-29

An Act to amend the Criminal Code (capital markets fraud and evidence-gathering)

S.C. 2004, c. 3

Assented to 2004-03-29

An Act to amend the Criminal Code (capital markets fraud and evidence-gathering)

SUMMARY

This enactment amends the Criminal Code by creating a new offence of prohibited insider trading and creating a new offence to prohibit threatening or retaliating against employees for disclosing unlawful conduct. The enactment increases the maximum penalties and codifies aggravating and non-mitigating sentencing factors for fraud and certain related offences and provides for concurrent jurisdiction for the Attorney General of Canada to prosecute those offences.

The enactment also creates a new procedural mechanism by which persons will be required to produce documents, data or information in specific circumstances.

Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

R.S., c. C-46CRIMINAL CODE

Marginal note:2001, c. 41, s. 2(1)
  •  (1) Paragraph (a) of the definition Attorney General in section 2 of the Criminal Code is replaced by the following:

    • (a) subject to paragraphs (c) to (g), with respect to proceedings to which this Act applies, means the Attorney General or Solicitor General of the province in which those proceedings are taken and includes his or her lawful deputy,

  • (2) The definition Attorney General in section 2 of the Act is amended by striking out the word “and” at the end of paragraph (e), by adding the word “and” at the end of paragraph (f) and by adding the following after paragraph (f):

    • (g) with respect to proceedings in relation to an offence referred to in sections 380, 382, 382.1 and 400, means either the Attorney General of Canada or the Attorney General or Solicitor General of the province in which those proceedings are taken and includes the lawful deputy of any of them;

Marginal note:1994, c. 44, s. 25(1)
  •  (1) Paragraph 380(1)(a) of the Act is replaced by the following:

    • (a) is guilty of an indictable offence and liable to a term of imprisonment not exceeding fourteen years, where the subject-matter of the offence is a testamentary instrument or the value of the subject-matter of the offence exceeds five thousand dollars; or

  • (2) Subsection 380(2) of the Act is replaced by the following:

    • Marginal note:Affecting public market

      (2) Every one who, by deceit, falsehood or other fraudulent means, whether or not it is a false pretence within the meaning of this Act, with intent to defraud, affects the public market price of stocks, shares, merchandise or anything that is offered for sale to the public is guilty of an indictable offence and liable to imprisonment for a term not exceeding fourteen years.

 The Act is amended by adding the following after section 380:

  • Marginal note:Sentencing — aggravating circumstances

    380.1 (1) Without limiting the generality of section 718.2, where a court imposes a sentence for an offence referred to in sections 380, 382, 382.1 and 400, it shall consider the following as aggravating circumstances:

    • (a) the value of the fraud committed exceeded one million dollars;

    • (b) the offence adversely affected, or had the potential to adversely affect, the stability of the Canadian economy or financial system or any financial market in Canada or investor confidence in such a financial market;

    • (c) the offence involved a large number of victims; and

    • (d) in committing the offence, the offender took advantage of the high regard in which the offender was held in the community.

  • Marginal note:Non-mitigating factors

    (2) The court shall not consider as mitigating circumstances the offender's employment, employment skills or status or reputation in the community if those circumstances were relevant to, contributed to, or were used in the commission of the offence.

 The portion of section 382 of the Act after paragraph (c) is replaced by the following:

is guilty of an indictable offence and liable to imprisonment for a term not exceeding ten years.

 The Act is amended by adding the following after section 382:

  • Marginal note:Prohibited insider trading

    382.1 (1) A person is guilty of an indictable offence and liable to imprisonment for a term not exceeding ten years who, directly or indirectly, buys or sells a security, knowingly using inside information that they

    • (a) possess by virtue of being a shareholder of the issuer of that security;

    • (b) possess by virtue of, or obtained in the course of, their business or professional relationship with that issuer;

    • (c) possess by virtue of, or obtained in the course of, a proposed takeover or reorganization of, or amalgamation, merger or similar business combination with, that issuer;

    • (d) possess by virtue of, or obtained in the course of, their employment, office, duties or occupation with that issuer or with a person referred to in paragraphs (a) to (c); or

    • (e) obtained from a person who possesses or obtained the information in a manner referred to in paragraphs (a) to (d).

  • Marginal note:Tipping

    (2) Except when necessary in the course of business, a person who knowingly conveys inside information that they possess or obtained in a manner referred to in subsection (1) to another person, knowing that there is a risk that the person will use the information to buy or sell, directly or indirectly, a security to which the information relates, or that they may convey the information to another person who may buy or sell such a security, is guilty of

    • (a) an indictable offence and liable to imprisonment for a term not exceeding five years; or

    • (b) an offence punishable on summary conviction.

  • Marginal note:Saving

    (3) For greater certainty, an act is not an offence under this section if it is authorized or required, or is not prohibited, by any federal or provincial Act or regulation applicable to it.

  • Definition of inside information

    (4) In this section, inside information means information relating to or affecting the issuer of a security or a security that they have issued, or are about to issue, that

    • (a) has not been generally disclosed; and

    • (b) could reasonably be expected to significantly affect the market price or value of a security of the issuer.

 The Act is amended by adding the following after section 425:

  • Marginal note:Threats and retaliation against employees

    425.1 (1) No employer or person acting on behalf of an employer or in a position of authority in respect of an employee of the employer shall take a disciplinary measure against, demote, terminate or otherwise adversely affect the employment of such an employee, or threaten to do so,

    • (a) with the intent to compel the employee to abstain from providing information to a person whose duties include the enforcement of federal or provincial law, respecting an offence that the employee believes has been or is being committed contrary to this or any other federal or provincial Act or regulation by the employer or an officer or employee of the employer or, if the employer is a corporation, by one or more of its directors; or

    • (b) with the intent to retaliate against the employee because the employee has provided information referred to in paragraph (a) to a person whose duties include the enforcement of federal or provincial law.

  • Marginal note:Punishment

    (2) Any one who contravenes subsection (1) is guilty of

    • (a) an indictable offence and liable to imprisonment for a term not exceeding five years; or

    • (b) an offence punishable on summary conviction.

 
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