In the following guest post, Deepshikha Dutt, Douglas B.B. Stewart,of and Frank E.P. Bowman of the Dentons law firm review and analyze a recent decision of the Ontario Superior Court of Justice relating to the liabilities of directors and officers under Ontario statutory law for misrepresentations in offering statements. This article is republished here with permission from Dentons. I would like to thank Deepshikha, Douglas, and Frank for allowing me to publish their article here. I welcome guest post submissions from responsible authors on topics of interest to this blog’s readers. Please contact me directly if you would like to submit an article. Here is Deepshikha,  Douglas, and Frank’s article.
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globe blueOne of the Dodd-Frank Act’s signature features was its creation of potentially massive bounties for whistleblowers that reported financial fraud to the SEC. During the time that the Dodd-Frank whistleblower program has been in place, the agency has made a number of significant bounty awards. Mary Jo White, the SEC chairwoman, has said that the program “has rapidly become a tremendously effective force-multiplier, generating high quality tips and, in some cases, virtual blueprints laying out an entire enterprise, directing us to the heart of an alleged fraud.” The SEC’s whistleblower program has also attracted the attention of other countries’ securities regulators, with the various countries reaching a variety of conclusions about the program, particularly its bounty award feature. In the past several days, securities regulators in Ontario and in Germany have each adopted their own whistleblower programs. The different approach the regulators have taken is interesting, as discussed below.
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Shareholder claimants seeking to pursue a misrepresentation claim under the Ontario Securities Act must obtain leave of court to proceed based on a statutory requirement that the plaintiff must show a “reasonable possibility that the action will be resolved at trial in favor of the plaintiff.” Ontario’s courts agree that this requirement sets a “low