The Power of Perspectives

The Canadian Bar Association

Yves Faguy

Securities law

What the SEC's DAO ruling means for Canadian initial coin offerings

By Yves Faguy August 1, 2017 1 August 2017

What the SEC's DAO ruling means for Canadian initial coin offerings

 

Addison Cameron-Huff points to last week’s Securities and Exchange Commission report ruling that an initial coin offering (ICO) of Decentralized Autonomous Organization (DAO) tokens, dating back to 2016, are securities.  An ICO is essentially is similar to an initial public offering; only here it is the practice of raising funds in exchange for “digital tokens.” It has been mostly unregulated until now, but the SEC report confirms that U.S. securities law will apply to ICOs with a similar structure as the DAO.  The DAO, which was crowdfunded through its token sale in 2016, is a blockchain-enabled organization that exists as a set of contracts tied to the Ethereum network.

As Cameron-Huff notes, the SEC has opted not to enforce any action against the DAO at this particular time. But the message is pretty clear. The SEC is open to blockchain technologies and token sales, but is putting future ICO issuers on notice that they must register and be compliant:

Blair Wiley and Evan Thomas at Osler boil it down:

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Competition law

Antitrust leniency programs: A disincentive to self-report?

By Yves Faguy July 31, 2017 31 July 2017

Antitrust leniency programs: A disincentive to self-report?

 

Morgan Lewis has a report out showing a major downward trend this year in cartel fines (only US $1.2 billion so far in 2017, compared to $7.8 billion for the full calendar year in 2016). In Canada fines have reached $9.9 in 2017, due to an ongoing automotive parts investigation.

Gabe Friedman reports on why the fines are dropping, in spite of the success of leniency programs adopted around the world over the last decade and a half.  He quotes antitrust partner Clay Everett who suggests that, ironically, the proliferation of leniency programs in different juridictions could be making it more difficult for those companies willing to self-report to be the first in order to secure a promise of immunity:

“There’s been a real surge in enforcement in those types of cases,” said Everett, adding that “a very high percentage of international cartel cases, in the past fifteen years, have been generated through the leniency programs.”

But he said the proliferation of “leniency” programs, and the increased penalties around the world for price-fixing, means that coming forward to self-report a violation now requires a more complicated calculus: There are so many authorities with overlapping jurisdictions, and many cartel members are skeptical that they will receive global credit for being first to self-disclose.

Thus, cartel members must make a strategic calculation about whether self-disclosing and receiving only partial credit is better than staying quiet and hoping authorities never learn about their cartel, Everett said.

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Duty to consult

NEB can fulfill duty to consult, but must do so meaningfully

By Yves Faguy July 26, 2017 26 July 2017

NEB can fulfill duty to consult, but must do so meaningfully

 

The top court handed down two major rulings today on the duty to consult Indigenous communities.

In Clyde River (Hamlet) v. Petroleum Geo‑Services Inc., it quashed a National Energy Board granting authorization to conduct offshore seismic testing for oil and gas off Baffin Island, noting, “No one benefits — not project proponents, not Indigenous peoples, and not non-Indigenous members of affected communities — when projects are prematurely approved only to be subjected to litigation.”

The Crown, it held, can rely on the NEB’s process to fulfill its duty to consult, but in this case the regulatory agency failed to conduct deep consultation:

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Trade

Eliminating NAFTA's chapter 19: A dealbreaker?

By Yves Faguy July 25, 2017 25 July 2017

Eliminating NAFTA's chapter 19: A dealbreaker?

 

Robert Fife and Steven Chase report today that Ottawa is insisting that removing Chapter 19 dispute-resolution panels from the NAFTA accord is a deal-breaker and is prepared to walk away from negotiations if the Trump administration keeps pressing its case on the issue.

Robert Wolfe, in a recent Policy Options piece, wonders whether Canada isn’t simply posturing:

It would be hard for Canada to accept absent an alternative, but no new system could be devised quickly. Canada fought hard for this provision, but has used the current rules only three times in the last decade. Is it worth much to Canada? The answer hinges on why its use has declined. If its existence restrains the use of trade protection measures against Canada (which could be why lobbies like the softwood lumber industry want it eliminated), then taking it away would be a bad idea. Alternatively, as cross-border supply chains grow in importance, maybe trade protection measures that are self-defeating are behind the decline. In sectors of homogenous upstream commodity trade, disputes may not be much of a constraint anyway — softwood may end in another long-term managed trade arrangement. In short, the Canadian strategy may be to make the Americans worry that chapter 19 is a landmine, while being prepared to exchange it for something more important, like relief from Buy American rules.

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CBA Futures

Legal futures round-up

By Yves Faguy July 14, 2017 14 July 2017

Legal futures round-up

 

Inspired by the CBA Legal Futures report on Transforming the Delivery of Legal Services in Canada, here’s our regular round-up of noteworthy developments, opinions and news in the legal futures space as a means of furthering discussion about our changing legal marketplace.

To kick things off, here’s an issue law firms are going to have to seriously address: their security weak spots. A recent study reveals that there is a “widespread lack of cybersecurity in law firms" and reports that  two-thirds of the 200 responding law firms had reported some sort of cyber breach. Also worrisome, many don’t have cybersecurity insurance.

That report was released as news hit that global law firm DLA Piper suffered a major cyber attack -- yet another a reminder that law firms are a choice target for hackers.

Some firms are taking the threat seriously. International immigration services firm Fragomen announced it is opening an immigration technology innovation lab in Pittsburgh, to be staffed with 40-50 professional – none of them lawyers. The office is going to be focused on software development and cybersecurity.

On the technology front, Julie Sobowale explores blockchain and what it means for legal professionals.  Here’s a hint: Smart contracts, which explains why AIG is teaming up with IBM “to develop a "smart" insurance policy that uses blockchain to manage complex international coverage.”

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