2022/23 JD MBA Student Fellows & Projects
1. Ryan Riemenschneider, JD/MBA Candidate 2023
Backgrounder: Regulation of Crypto Currency (December 1, 2022)
prepared in support of CMI Event - Canadian Crypto Regulation: Right Approach? What's Next?
The use of cryptocurrencies and blockchain technology has seen explosive growth over the past decade, with over $865B USD of global cryptocurrency market cap as of the beginning of December 2022 (Coin Market Cap, 2022). Worldwide, regulators have been grappling with how to deal with this new technology, and different jurisdictions have taken a variety of approaches. Given the significant decline in the value of crypto assets, with approximately 70% of a decrease in total value since its peak (Coin Market Cap, 2022), and the accompanying collapse of major platforms such as FTX, there has been increased discussion as to whether current regulations are appropriate, and what the next steps should be.
Crypto assets and decentralized finance have certainly gained a significant amount of traction in Canada. Approximately 13% of Canadians currently own crypto either directly or indirectly, with an additional 8% having held crypto within the past 12 months (Ontario Securities Commission Investor Office, 2022). A further 30% are considering investing in the next 12 months (Vingoe, 2022), all in spite of a wide lack of understanding with approximately half of Canadians being unaware of what cryptocurrencies even are (Ontario Securities Commission Investor Office, 2022).
Canada is also no stranger to attempts to regulate the decentralized finance space. Following the lock-up of QuadrigaCX in 2018, Canadian securities regulators, namely the Ontario Securities Commission (“OSC”), began to pursue more stringent regulation. Despite the opinion that the majority of cryptocurrencies are commodities, the OSC views any crypto assets being held by the trading platforms to actually constitute a security, in part due to the high degree of dependence users have on the delivery of assets from these platforms (Vingoe, 2022). This in turn grants the OSC jurisdiction on the grounds of securities regulation to regulate these platforms as well as address issues as they arise. Though the approach has been described as “piecemeal” with its focus on custody in reaction to QuadrigaCX’s own custody issues (Ossowski & Clement, 2022), it would require crypto trading platforms to register with Investment forward.
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2. Ethan Kelly, JD/MBA Candidate 2024
Nicky Young, JD/MBA Candidate 2024
Greenwashing in Investment Management:
Comparative Regulatory and Fund Disclosure Responses
Environmental, social, and governance (“ESG”)-oriented investing has become highly prominent in asset management as more investors seek sustainable investment vehicles. As investor interest has increased, the number of funds labelled “sustainable” or “ESG” has experienced similar growth. A report by PWC projects that ESG-focused institutional investment will grow 84% from its 2022 levels, reaching $33.9 trillion (USD) in value and comprising 21.5% of global assets under management in 2026. In Canada, the value of assets in “sustainable funds” grew 160% between 2020 and 2021, and the number of funds grew from 105 to 156.3 In Europe, 27% of funds had been repurposed to include ESG factors by the end of 2021.
The proliferation of ESG investing creates potential for greenwashing, where asset managers label funds as sustainable without undertaking corresponding ESG investment strategies. Early research indicates that corporations have incentives to change their fund names to capitalize on the increasing interest and cash inflow into ESG-labeled financial products. ESG-profiled funds receive higher cash inflows than non-ESG funds for both retail and institutional funds, irrespective of whether the fund was performing well on the Morningstar sustainability ratings.5 In addition, some fund managers may be using ESG labeling to improve fund capital inflow: one study found that managers are converting their funds to ESG-focused funds when the funds’ inflows are lagging behind inflows to other funds.
While securities regulators globally have expressed concerns about this increased potential for g greenwashing, regulatory responses have varied considerably.7 The European Union (“EU”) has developed a relatively comprehensive regulatory framework, whereas the Canadian and United States (“US”) have adopted less formal approaches thus far. The US has largely addressed greenwashing through enforcement mechanisms, while Canada has offered guidance to fund issuers, with no formal enforcement or changes in disclosure requirements to date.
This paper seeks to evaluate the efficacy of each of these responses at improving the quality of fund’s ESG disclosures. This paper will first provide an overview of the law and the different regulatory approaches in the EU, the US, and Canada today. This paper will then analyze the impact of the US and Canadian regulatory responses to the quality of ESG disclosures in fund prospectuses. Finally, this paper concludes by finding that, based on the limited subset of funds analyzed, the Canadian regulatory response has been more effective at improving the quality of ESG disclosures.
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3. Matthew Cohn, JD/MBA Candidate2024
Alexandra Goldman, JD/MBA Candidate 2024
Material Adverse Event (MAE) Clauses in M&A Agreements:
Canadian and American Legal Perspectives
Material Adverse Event (MAE) clauses (sometimes referred to as Material Adverse Effect, or Material Adverse Change (MAC), clauses) in Merger and Acquisition (M&A) agreements have seen an increase in notoriety and related litigation in recent years. The Covid-19 pandemic, as well as Elon Musk’s ill-fated attempt to back out of the purchase of Twitter, increased the public’s familiarity with these clauses. However, MAEs have been included in transactions for decades, and jurisprudence in both the United States and Canada has contributed to an evolving understanding of how MAE clauses can be understood, utilized, and litigated.
Practical Law describes MAE clauses, in the context of M&A agreements as “a contractual term in the acquisition agreement giving the buyer the right to withdraw from the transaction if certain events occur between exchanging the acquisition agreement and completion that are detrimental to the target, its business or assets.” In their simplest form, they protect the buyer against large-scale changes in the business prospects of their target company in the timeframe between agreeing to and completing a purchase. However, these clauses are usually appended with a series of “carve-outs”, which list situations which will not qualify as an MA for the purposes of a given transaction. This list usually includes force-majeure-type events such as natural disasters, changes in economic conditions and changes in law—as long as these changes do not have disproportionate impacts on the target company relative to other industry participants.
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4. Kathryn McCoy, JD/MBA Candidate 2023
OSC Whistleblower Program Report Card continued
2021/22 JD MBA Student Fellows & Projects
1. Jacob Broz, JD/MBA Candidate 2023
Ryan Riemenschneider, JD/MBA Candidate 2023
An Analysis of Approaches to Regulating Crypto Trading Platforms: Ontario and Singapore Compared
This paper explores the regulation of crypto asset trading platforms in Ontario, Canada’s leading jurisdiction for finance, and compares it with the approach taken by Singapore. Singapore has often been described as a success story for building an innovative market for crypto currency trading that appropriately balances market efficiency and investor protection. Going forward, Ontario’s principal securities regulators, the Ontario Securities Commission (OSC), can consider the approach the Monetary Authority of Singapore (MAS) has taken in constructing innovative crypto currency markets. In each section in this paper, we will compare the approaches that the OSC and MAS take for crypto trading platform regulation. At the end of the paper, we offer policy recommendations for each category we explore and offer guidance for Ontario going forward. read more
2. Will Kosiancic, JD/MBA Candidate 2023
Kathryn McCoy, JD/MBA Candidate 2023
OSC Whistleblower Program Report Card
3. Yousef El Zohiry, JD/MBA Candidate 2023
Alexander Green, JD/MBA Candidate 2022
Angela Gu, JD/MBA Candidate 2
Sydney Palter, JD/MBA Candidate 2023
Adam Strub, J/MBA Candidate 2024
Jimmy Zhou, JD/MBA Candidate 2023
Retrospective and Prospective Evaluation of Canadian Security Class Action Regime
2020/21 JD MBA Student Fellows & Projects
1. Maggie Xing, JD/MBA Candidate 2022
Well-Known Seasoned Issuers in Canada
Well-Known Seasoned Issuer (WKSI) is a concept adopted by the United States Securities and Exchange Commission (SEC) in 2005. WKSI is a category of issuers that comprises of the largest public companies. The benefit of qualifying as a WKSI is a series of relaxed restrictions on public offerings and the reduction in regulatory burden.
In Canada, market participants have also indicated an interest in adopting a WKSI category. The Capital Markets Modernization Taskforce (“Taskforce”) was formed by the Ontario government in February 2020 with a mandate to review and modernize Ontario’s capital markets. The Report, which followed consultations with market participants, contained 47 proposals. The 12th proposal recommended the creation of a WKSI category. Read more
2. Matthew Auvinen
Taking Stock: Health of Canadian Public Equity Markets
The U.S. listing gap, Doidge, Karolyi & Stulz reported
that the number of listed firms in the United States is now lower than
expected. This paper considers whether a similar listing gap is present in
Canada. Listing data and census data was processed and analysed with three
questions in mind: (1) How has the number of firms listed in Canada changed
over time? (2) How has the listing propensity for a Canadian firm changed over
time? (3) How have annual new listings and de-listings in Canada changed over
time? The results indicate that the number of listed firms in Canada has
decreased over time, the listing propensity for a Canadian firm has decreased
over time, the annual number of new listings in Canada has decreased over time
and the annual number of de-listings in Canada has increased over time. Mixed
together, Mixed together, these results point to the conclusion that Canada has
a listing gap. Read more
Background - The U.S. listing gap (Craig Doidge G. Andrew Karolyi, René M.Stulz)
3. Stephanie Taylor, JD/MBA Candidate 2021
.Measuring Corporate Crime In Canada – Project Summary
Financial Crime Project Summary available here