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.

 The Act is amended by adding the following after section 487.01:

Marginal note:Definitions

487.011 The following definitions apply in sections 487.012 to 487.017.

“data”

« données »

“data” has the same meaning as in subsection 342.1(2).

“document”

« document »

“document” means any medium on which is recorded or marked anything that is capable of being read or understood by a person or a computer system or other device.

  • Marginal note:Production order

    487.012 (1) A justice or judge may order a person, other than a person under investigation for an offence referred to in paragraph (3)(a),

    • (a) to produce documents, or copies of them certified by affidavit to be true copies, or to produce data; or

    • (b) to prepare a document based on documents or data already in existence and produce it.

  • Marginal note:Production to peace officer

    (2) The order shall require the documents or data to be produced within the time, at the place and in the form specified and given

    • (a) to a peace officer named in the order; or

    • (b) to a public officer named in the order, who has been appointed or designated to administer or enforce a federal or provincial law and whose duties include the enforcement of this or any other Act of Parliament.

  • Marginal note:Conditions for issuance of order

    (3) Before making an order, the justice or judge must be satisfied, on the basis of an ex parte application containing information on oath in writing, that there are reasonable grounds to believe that

    • (a) an offence against this Act or any other Act of Parliament has been or is suspected to have been committed;

    • (b) the documents or data will afford evidence respecting the commission of the offence; and

    • (c) the person who is subject to the order has possession or control of the documents or data.

  • Marginal note:Terms and conditions

    (4) The order may contain any terms and conditions that the justice or judge considers advisable in the circumstances, including terms and conditions to protect a privileged communication between a lawyer and their client or, in the province of Quebec, between a lawyer or a notary and their client.

  • Marginal note:Power to revoke, renew or vary order

    (5) The justice or judge who made the order, or a judge of the same territorial division, may revoke, renew or vary the order on an ex parte application made by the peace officer or public officer named in the order.

  • Marginal note:Application

    (6) Sections 489.1 and 490 apply, with any modifications that the circumstances require, in respect of documents or data produced under this section.

  • Marginal note:Probative force of copies

    (7) Every copy of a document produced under this section, on proof by affidavit that it is a true copy, is admissible in evidence in proceedings under this or any other Act of Parliament and has the same probative force as the original document would have if it had been proved in the ordinary way.

  • Marginal note:Return of copies

    (8) Copies of documents produced under this section need not be returned.

Marginal note:Production order — financial or commercial information
  • 487.013 (1) A justice or judge may order a financial institution, as defined in section 2 of the Bank Act, or a person or entity referred to in section 5 of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, unless they are under investigation for an offence referred to in paragraph (4)(a), to produce in writing the account number of a person named in the order or the name of a person whose account number is specified in the order, the status and type of the account, and the date on which it was opened or closed.

  • Marginal note:Identification of person named in the order

    (2) For the purpose of confirming the identity of the person named in the order or whose account number is specified in the order, the production order may require the financial institution, person or entity to produce that person's date of birth, current address and any previous addresses.

  • Marginal note:Production to peace officer

    (3) The order shall require the information to be produced within the time, at the place and in the form specified and given

    • (a) to a peace officer named in the order; or

    • (b) to a public officer named in the order, who has been appointed or designated to administer or enforce a federal or provincial law and whose duties include the enforcement of this or any other Act of Parliament.

  • Marginal note:Conditions for issuance of order

    (4) Before making an order, the justice or judge must be satisfied, on the basis of an ex parte application containing information on oath in writing, that there are reasonable grounds to suspect that

    • (a) an offence against this Act or any other Act of Parliament has been or will be committed;

    • (b) the information will assist in the investigation of the offence; and

    • (c) the institution, person or entity that is subject to the order has possession or control of the information.

  • Marginal note:Terms and conditions

    (5) The order may contain any terms and conditions that the justice or judge considers advisable in the circumstances, including terms and conditions to protect a privileged communication between a lawyer and their client or, in the province of Quebec, between a lawyer or a notary and their client.

  • Marginal note:Power to revoke, renew or vary order

    (6) The justice or judge who made the order, or a judge of the same territorial division, may revoke, renew or vary the order on an ex parte application made by the peace officer or public officer named in the order.

  • Marginal note:Power of peace officer

    487.014 (1) For greater certainty, no production order is necessary for a peace officer or public officer enforcing or administering this or any other Act of Parliament to ask a person to voluntarily provide to the officer documents, data or information that the person is not prohibited by law from disclosing.

  • Marginal note:Application of section 25

    (2) A person who provides documents, data or information in the circumstances referred to in subsection (1) is deemed to be authorized to do so for the purposes of section 25.

  • Marginal note:Application for exemption

    487.015 (1) A person named in an order made under section 487.012 and a financial institution, person or entity named in an order made under section 487.013 may, before the order expires, apply in writing to the judge who issued the order, or a judge of the same territorial division as the judge or justice who issued the order, for an exemption from the requirement to produce any document, data or information referred to in the order.

  • Marginal note:Notice

    (2) A person, financial institution or entity may only make an application under subsection (1) if they give notice of their intention to do so to the peace officer or public officer named in the order, within 30 days after it is made.

  • Marginal note:Order suspended

    (3) The execution of a production order is suspended in respect of any document, data or information referred to in the application for exemption until a final decision is made in respect of the application.

  • Marginal note:Exemption

    (4) The judge may grant the exemption if satisfied that

    • (a) the document, data or information would disclose information that is privileged or otherwise protected from disclosure by law;

    • (b) it is unreasonable to require the applicant to produce the document, data or information; or

    • (c) the document, data or information is not in the possession or control of the applicant.

Marginal note:Self-incrimination

487.016 No person is excused from complying with an order made under section 487.012 or 487.013 on the ground that the document, data or information referred to in the order may tend to incriminate them or subject them to any proceeding or penalty, but no document prepared by an individual under paragraph 487.012(1)(b) may be used or received in evidence against that individual in any criminal proceedings subsequently instituted against them, other than a prosecution under section 132, 136 or 137.

Marginal note:Offence

487.017 A financial institution, person or entity who does not comply with a production order made under section 487.012 or 487.013 is guilty of an offence and liable on summary conviction to a fine not exceeding $250,000 or imprisonment for a term not exceeding six months, or to both.

 
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