Introduction
The Ontario Securities Commission Staff (the OSC or Staff)has the power under section 13 of the Securities Act (the Act) to compel witnesses to attend interviews and testify under oath. Precedent had been set in previous Tribunal decisions that the compelled testimony of a respondent could be entered as evidence by Staff against that respondent in a subsequent enforcement hearing, unrestricted by the protections against self-incrimination under the Ontario Evidence Act. In TeknoScan Systems Inc (Re) (TeknoScan),[1] a panel of the Capital Markets Tribunal (the Tribunal) declined to follow previous precedent, raising uncertainties as to Staff’s continued use of compelled testimony.
Recently, in Hogg v. Chief Executive Officer (Hogg),[2] the Ontario Divisional Court (the Court) resolved the uncertainty created by TeknoScan, holding that a respondent’s compelled testimony during the investigatory process may properly be admitted against the interests of that individual in enforcement proceedings that flow from the investigation.
Legal framework
Under Part VI of the Act, Staff has broad powers to conduct investigations into potential breaches of Ontario securities law.[3] Among these powers is the ability of an investigator or examiner to compel an individual to participate in an investigation and testify under oath. [4]
Ontario law also safeguards against self-incrimination by prohibiting the use of compelled testimony against an individual in subsequent proceedings. Subsection 9(2) of Ontario’s Evidence Act provides that where an individual objects to answering a question on the basis that it may be self-incriminating but is nonetheless compelled to answer, that answer cannot be used against them “in any civil proceeding or in any proceeding under any Act of the Legislature.”[5]
Background
The central issue in Hogg was the legality of a cryptocurrency venture operated by Troy Hogg and companies controlled by Mr. Hogg (the Appellants). Between 2017 and 2019, the Appellants raised at least US$51.7 million by selling over 1.5 billion cryptocurrency tokens.
Underlying this venture were representations made to the public and investors about the use of proceeds and profits. Specifically, the Appellants represented that proceeds from token sales would be used to purchase cryptocurrency mining equipment and that the profits would be used to purchase gold to “back” the tokens and create an intrinsic “floor value” for the tokens, as well as to purchase additional mining equipment, repurchase tokens and fund mining operations. The tokens were not backed by gold and significant amounts of the proceeds were used for unrelated purposes that were not disclosed to investors.
Staff conducted an investigation in 2019. As part of the investigation, Staff compelled interviews of Mr. Hogg. Counsel for Mr. Hogg claimed all protections available to compelled witnesses, including those contained in s. 9 of the Evidence Act.[6]
At the hearing, Staff entered the redacted transcript of Mr. Hogg’s compelled interviews into evidence. Staff had redacted the portions of the transcript in which Mr. Hogg’s counsel had claimed the available evidentiary protections and did not inform the Tribunal that Mr. Hogg had taken those protections as a compelled witness. As a result, the Tribunal was unaware of any potential admissibility issues.[7]
The Tribunal found the Appellants liable for several breaches of the Securities Act. Among other breaches, the Appellants were found to have perpetuated two fraudulent schemes: (1) false representations that the tokens were backed by gold or that gold was acquired and confirmed through an audit, and (2) the misappropriation of investor funds. Further, the Tribunal found that the sale of tokens did not comply with the registration or prospectus requirements, contrary to s. 25(1) and s. 53(1) of the Securities Act.
Grounds of appeal
The Appellants appealed to the Court, arguing (among other things) that the Tribunal committed an error of law by admitting the transcripts of the compelled interviews when Mr. Hogg took the protections available to him under s. 9 of the Evidence Act.[8] The Appellants relied upon TeknoScan.
The Tribunal’s decision in TeknoScan
The significance of the Court’s conclusion in Hogg on the admissibility of compelled evidence is best understood in light of the Tribunal’s prior decision in TeknoScan. At issue in TeknoScan was an allegation of fraud arising from a notice sent to shareholders about an upcoming share purchase transaction that ultimately did not occur. The Tribunal concluded that TeknoScan was liable for perpetrating a fraud contrary to s. 126.1 of the Securities Act for omitting essential information from the notice such that it was dishonest and misleading. Further, the Tribunal found that TeknoScan had breached s. 126.2 by making a materially misleading statement to investors.
In its decision, the Tribunal held that the respondent’s compelled testimony could not be admitted into evidence by Staff for use against that respondent where they had properly invoked the protection against self-incrimination contained in s. 9(2) of the Evidence Act. Critical to this conclusion was the Tribunal’s reasoning that Part VI investigations are distinct from the various enforcement proceedings that could subsequently arise, including an administrative proceeding under s. 127.[9]
Notably, the panel refused to follow precedent considering this same issue on the basis that those prior decisions were made on the erroneous basis that Part VI investigations and enforcement hearings were part of the same proceeding.[10]
Decision
In Hogg, the Court dismissed the appeal on all issues.
With respect to the use of transcripts of compelled testimony, the Court held that “Mr. Hogg’s reliance on s. 9 [was] not a bar to the use of his compelled interviews at the hearing because [the] regulatory proceeding under s. 127 of the Securities Act [did] not constitute a separate proceeding from the investigation in which the compelled interviews were taken.”[11] The Court emphasized the underlying purpose of the Securities Act is to protect the public from “unscrupulous market trading practices” and that the use of Mr. Hogg’s evidence was to further this purpose.[12]
The Court relied on its previous decision in Todorov v. Ontario Securities Commission,[13] confirming that in Ontario, the use of compelled testimony under a s. 13 summons at the subsequent hearing is not prohibited by s. 9(2) of the Evidence Act.[14] The Court cited further caselaw addressing analogous regulatory proceedings that treated investigatory measures as part of the same regulatory proceeding as enforcement hearings arising from those investigations. The Court held that treating interviews and enforcement hearings as separate proceedings would undermine the purpose of the regulatory framework and the onerous obligation placed on self-regulating bodies to protect the public.[15]
The Court directly addressed TeknoScan. It remarked that the decision was neither binding nor persuasive.[16] The Tribunal in TeknoScan overemphasized the availability of different remedies arising from a Part IV investigation, which did not establish a separate identity between the investigation and any subsequent hearing. Further, the panel in TeknoScan failed to engage with the jurisprudence directly addressing the intersection between s. 13 of the Act and s. 9 of the Evidence Act.[17]
Key insights
Hogg appears to have put an abrupt end to the short-lived advantage TeknoScan provided respondents in defending Staff allegations at Tribunal hearings. Staff has been given the green light to resume relying on a respondent’s compelled transcript evidence to provide its case. It remains to be seen how respondents before the Tribunal will continue to advance arguments against the use of their compelled transcripts considering Hogg.
In light of Hogg, the importance of respondents being well prepared for their compelled interviews with Staff cannot be overstated. Effective counsel will ensure their clients are well prepared; understand the interview process and their legal rights and obligations; assert their client’s protections against the use of their compelled transcript at subsequent proceedings (that are unconnected to the investigation as per Hogg); protect privilege; and object to out of scope, unfair and improper questions.
For more information on this topic, please reach out to the authors, Raphael T. Eghan, Brandon Barnes Trickett and Janson Fu. The authors thank Alison Balcom, articling student, for her assistance with this article.
[1] 2024 ONCMT 32 [TeknoScan].
[2] 2025 ONSC 6214 (Div Ct) [Hogg].
[6] Hogg, supra note 2 at para 15.
[9] TeknoScan, supra note 1 at paras 61-64.
[11] Hogg, supra note 2 at para 61.
[13] 2018 ONSC 4503 (Div Ct).
