B.C. court finds investor must testify to BCSC

An investor who sought to invoke his Charter Rights to avoid providing evidence to British Columbia Securities Commission (BCSC) investigators has been denied by a B.C. court and ordered to answer the regulator’s questions.

The Supreme Court of B.C. ruled that the investor, Harish Tak, is not entitled to a constitutional exemption from providing evidence to the BCSC.

According to the court’s ruling, Tak argued that he was entitled to an exemption from testifying based on his right against self-incrimination under the Charter.

In Canada, compelled testimony can’t be used in a subsequent proceeding — however, Tak was concerned that his testimony to the BCSC could be used against him to bring a criminal proceeding in the U.S.

“The problem, as Mr. Tak frames it, is that if he is compelled to testify in Canada pursuant to the [BCSC summons], he has a serious risk of his evidence being used against him in a subsequent U.S. prosecution, thus violating his Charter protected right against self-incrimination,” the court noted.

According to the court, the regulator was investigating trading and the distribution of securities in two firms (NewGen Biopharm Corp. and Breathtec Biomedical Inc.) and that, as part of the investigation, it was looking at the activities of four brokers at Mackie Research Capital Corp. — where Tak was a client and his brother was a broker.

The court noted that, according to the BCSC, “Mr. Tak is not a target of the investigation but may have relevant evidence.”

It also said that the U.S. Securities and Exchange Commission (SEC) has its own investigation underway, into trading in NewGen and its public disclosures.

“There is no evidence that Mr. Tak faces criminal charges or that he is the subject of any criminal investigation in Canada or the U.S. Nevertheless, he has expressed a concern that there is a risk that his compelled information may be used against him in a future U.S. criminal prosecution,” the court said.

Ultimately, the court concluded that Tak isn’t entitled to a constitutional exemption from answering the BCSC’s questions.

“The predominant purpose of the [BCSC] investigation is securities regulation, not the criminal prosecution of Mr. Tak. Therefore, his evidence is compellable,” the court ruled.

Additionally, it found, “the Charter has no application to a possible future deprivation of Mr. Tak’s right against self-incrimination in a U.S. criminal proceeding.”

The court also ruled that Tak’s concerns about his rights in a future U.S. proceeding are “speculative and his right against self-incrimination is not engaged by virtue of being required to comply with the summons.”

Finally, the court declined to place any restrictions on the BCSC sharing compelled evidence with the SEC, noting, “The obvious social importance of international cooperation in cross-border securities regulation” would outweigh “the speculative concerns raised by Mr. Tak.”

The court ordered Tak to comply with the BCSC’s summons and to answer its questions under oath.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.