THE SECURITIES REFERENCE: THE SUPREME COURT GOT IT RIGHT
DARCY L. MACPHERSON*
On December 22, 2011, the Supreme Court of Canada released its opinion in Reference re Securities Act.[1] The federal government had sought the opinion of the Court with respect to a fairly comprehensive piece of proposed legislation that would, among other things, create a national regulator for the trade in securities (publicly traded equity and debt instruments often, though not exclusively, from corporate issuers).[2] To say that the opinion offered by the Court was not exactly a holiday gift for the newly-minted federal majority government would be an understatement.
The federal government had argued that the general trade and commerce power, provided for under s 91(2) of the Constitution Act, 1867,[3] was sufficiently broad to encompass the proposed legislation. The Court disagreed, holding that the proposed legislation did not fit the test for this power, provided for in General Motors of Canada v City National Leasing.[4]
The point of this initial posting to the MLJ Online blog is not to rehash whether in fact the Court was correct in its application of the GM case.[5] For many of my colleagues in academic commercial law circles, it would have been preferable if the Court had found the proposed Securities Act to be constitutionally valid. It appears that I am in the minority in believing that the Court got it right when they held that the application of the trade and commerce power would be inappropriate. The following explains why I agree with the Court from a policy perspective.
