Court overturns BCSC asset freeze order

A court in British Columbia has upheld a challenge to an asset freeze order imposed by the British Columbia Securities Commission (BCSC), ruling that the regulator must provide evidence that an order is needed.

The Court of Appeal for B.C. ruled that the BCSC must revoke an asset preservation order that was issued against Patrick Aaron Dunn and Viribus Structural Connectors Inc. The order came in the wake of allegations that Dunn breached a BCSC order against him by serving as a director for two companies while prohibited from doing so.

The allegations, which have not been proven, were issued in late 2020.

In early 2021, the BCSC obtained an asset preservation order against Dunn and Viribus on the basis that enforcement allegations had been issued against them.

Dunn appealed that order to the commission, which rejected his bid to overturn the asset freeze.

However, the Court of Appeal sided with Dunn.

The court found that a notice of hearing being issued is not enough to justify an asset preservation order. Before a preservation order can be issued, it said, some evidence of misconduct that may result in monetary sanctions is needed.

“It is not onerous to require that the executive director persuade the commission that there is some evidence to support the allegation of a breach. The standard is not met by simply establishing that a notice has been issued,” the court said in its decision, upholding the appeal and directing the BCSC to revoke the order.

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.