Yes, Investment Advisers Should be Fiduciaries

Co-authored with John Chapman, JD student, University of Toronto Faculty of Law.

Did you know that your investment adviser is not bound by an explicit legal duty to act in your best interests? Surprising? Yes, but more curious is the intense debate about whether this duty should be made explicit in the law. Those who represent investors should be bound by an express fiduciary duty. Alas, such is not the case.

First, let’s be clear that the relevant law is a mess. The standard of conduct is cobbled together from provincial securities regulations, common-law principles and industry requirements, so it is difficult to say when a fiduciary duty applies without evaluating each relationship on a case-by-case basis, which often requires a full trial. Another reason that a national securities regulator is a good idea.

Crowdfunding: A Step in the Right Direction

This week, the Ontario Securities Commission published a progress report in which it indicated that it will consider a crowdfunding exemption. This is good news for investors and issuers.

“Crowdfunding” is a means of selling any product or service over the Internet to a broad group of consumers. The cost savings for the issuer  are obvious: the issuer can raise capital more quickly than under the traditional prospectus method. The absence of an underwriter means that there is no “spread” (i.e. the net profit between the proceeds of the issue and the amount the issuer receives) payable to the underwriter. The issuer “speaks to” investors directly by selling its securities over the Internet. Non-pecuniary benefits include an investor’s ability to purchase securities in a startup that is connected to social causes that he or she supports.

Welcome to Professors Larissa Katz and Malcolm Thorburn

Tuesday, July 9, 2013

The Faculty of Law is pleased to welcome Professors Larissa Katz and Malcolm Thorburn, who officially joined the law school on July 2, 2013. The scholars were hired in 2011 but were on sabbatical at the University of Oxford, then taught for a final year at Queen’s University. 

Larissa Katz holds an Honours Bachelor of Arts degree from the University of Alberta; a Bachelor of Laws from the University of Alberta;  and a Master of Laws and SJD from Yale Law School.  She served as a law clerk to Justice Gonthier at the Supreme Court of Canada, and worked as a litigation lawyer with Sullivan & Cromwell in New York for two years prior to entering academia.  Professor Katz works on property law and property theory and publishes widely in that field.  She will teach Property and Trusts.

Panel on Ethics in Law and Business and other recent webcasts

Monday, March 18, 2013

The University of Toronto Faculty of Law's Centre for the Legal Profession (CLP) recently held a panel discussion to launch its new Program on Ethics in Law and Business. The panel included CLP academic director Prof. Anita Anand, Justice Michael Code, Jeremy Fraiberg, Julia Holland, Lawrence Ritchie and Prof. Alexander Dyck. The panel discussed fact scenarios based on two recent Canadian business catastrophes: Nortel and YBM Magnex.

The panel discussion was recorded, and you can watch the panel discussion webcast here.

Other recent events at the Faculty of Law can also be viewed online:

Eviscerated or Not: More on the Access Copyright Question

Originally posted on Prof. Katz's blog

In a lengthy post last week, Barry Sookman responded, and attempted to refute, Michael Geist's analysis of the implications of the recent Supreme Court of Canada's decisions on Access Copyright and its business model. In a nutshell, Michael Geist argued that schools, which already have directly negotiated licenses with numerous publishers, can now "rely more heavily on fair dealing for the copying that takes place on campus and in the classroom. This includes copies made by teachers for students for instructional purposes, copies that previously formed a core part of Access Copyright's claim of the necessity of a licence." Michael Geist never argued that the Supreme Court held that all copying in schools is fair dealing and that a license is never required. Rather, Michael Geist’s essential point is that Access Copyright's very restrictive licenses offer very little beyond what is either already licensed (and often paid for) or what might very likely be regarded as fair dealing anyway.

Copyright Taxation Without Representation

The Copyright Board of Canada and that various tariffs that it certifies rarely attract media attention. But a tariff recently certified received coverage by most major media outlets. That tariff, mandating payments for playing recorded music in weddings and other events for the years 2008-2012, will be collected by Re:Sound, a private organization representing record companies and performing musicians. If the events include dancing, the fee is double. This unusual media attention, often describing the fees as a “wedding tax” or “dancing tax”, is not surprising because it reflects how undemocratic some aspects of Canada’s copyright system have become. If that is not enough, Re:Sound now contemplates a threefold increase in the “dancing tax” according to its newly proposed tariff for the years 2013-2015.

Response to McMaster's Q&As on Access Copyright

I received a copy of a document in which McMaster University provides answers to some of the questions arising out of its decision to sign the Model License with Access Copyright.

Since many universities are grappling with similar questions and answers, I have taken the liberty of providing some responses to this document. The document is in a Q&A form, so I added my responses in green below each answer.

You can read it here.

Originally posted on Prof. Katz's blog.

UofT Faculty Association Questions the Access Copyright Agreement

Originally posted on Prof. Katz's blog.

The University of Toronto Faculty Association (UTFA) has recently sent a letter to UofT's Provost and Vice President questioning the decision to sign a license agreement with Access Copyright. UTFA's letter raises many concerns that have already been shared on this blog and by others.

UTFA asks the Provost to "clarify the Administration’s interpretation of the scope of fair dealing rights and any plans by your office to advocate publicly for an expansive interpretation of these rights in higher education in Canada. This might include, for instance, any plans you have to revisit the new contract in light of pending developments in the interpretation and implementation of fair dealing rights and copyright law more broadly in Canada."

Keep Calm, Opt Out, and Carry On

Originally posted on Prof. Katz's blog.

One of the questions that troubles many Canadian universities who need to decide whether to accept Access Copyright offer-that-they-can’t-refuse is what will be the consequences of not signing the AUCC-brokered Model License. One fear, which I have addressed in an earlier post, concerns the risk of being liable for copyright infringement in case that some infringing copies would be made on campus. The other fear is the possibility that the Copyright Board will approve Access Copyright’s Proposed Tariff, and that upon its approval, would become mandatory and retroactive.

The precise effect of an approved tariff is a novel question and there is very little, if any, binding case, and virtually no commentary, and admittedly, my own views on this question have evolved. Therefore, this post reflects some of my recent thinking on this question. In brief, my opinion is that the view that once approved, the tariff will be mandatory is not mandated by the Copyright Act and will be in contrast to basic legal principles. Parliament did not and could not have indented to allow such an outcome, and even if it did, it is doubtful whether this would be a constitutionally valid exercise of its legislative power.[1]