In the summer of 2008, a numbered company owned solely by Jeffrey MacIntosh, a professor who specializes in corporate and securities law, took a $36,000 loss on BCE call options that he had hoped may result in a $500,000 windfall.
MacIntosh purchased the call options in mid-June 2008, just ahead of a Supreme Court of Canada decision on the validity of the deal, gambling an approval would boost the share price. The Supreme Court approved the deal, but negative press reports stalled the price.
MacIntosh sold his call options at a loss on July 2, following a June 30 Globe article by Sinclair Stewart, who quoted confidential sources hinting the deal may be in trouble. But by July 4, the tide had apparently turned, and BCE put out a press release announcing an agreement had in fact been reached.
After MacIntosh’s unsuccessful attempt to get the Ontario Securities Commission to investigate, his company launched a $30-million class action on behalf of those who lost money between June 30 and July 4, alleging “misinformation” provided to the Globe by the anonymous sources breached the Securities Act and caused the losses.
As part of the proposed class action, MacIntosh’s company applied for an order that Stewart turn over the names of his sources so they could be added as defendants, along with BCE and its proposed buyers.
But in his April 20 decision, Ontario Superior Court Justice Edward Belobaba found there was “little to no public interest in compelling disclosure,” adding that in his view, “none of what was said by the confidential sources was clearly or even likely in breach of provincial securities law.”
According to the decision, MacIntosh has also filed a $3.5-million action against Dundee Securities and his former investment advisers for the trading losses that he allegedly sustained over several years because of negligently provided financial advice. MacIntosh had invested more than $1.7 million in his trading account, but by the summer of 2010 the amount had dwindled to $98,000, according to Belobaba’s decision.
The Globe wanted $255,000 to cover its fees and disbursements defending the anonymous-source application, while lawyers for MacIntosh’s company’s claimed no costs should be awarded because of the novelty of the case and the public interest issues raised. An earlier motion for security for costs was settled when MacIntosh’s law firm, Siskinds LLP, agreed to satisfy any costs award.
In his May 28 decision on costs, Belobaba said the case was a suitable one for costs, noting that he would not characterize it as a public interest lawsuit.
“The proposed class action does have a public interest component but it is essentially a private proceeding to recover financial losses sustained in trading transactions,” he wrote.
Belobaba settled on the figure of $165,000, an amount he said “would not be unexpected; nor would it be unfair or unreasonable.”
The main class action suit is still awaiting certification.