Canadian Lawyer

w w w . C A N A D I A N L a w y e r m a g . c o m J U N E 2 0 1 5 41 of that information before it was publicly disclosed. In the Finkelstein investigation, Davies' computer records revealed when Finkelstein accessed law firm files on certain deals, and the phone records indicated calls between him or his house and Azeff. These "meta- data" were matched up with large trades in certain stocks that took place just before corporate deals were announced publicly. "There is a lower evidentiary standard here, and a willingness to use this circumstantial evidence, to ensure that those entrusted with the integrity of the capital markets do not erode public confidence," says Bathgate. "Securities lawyers are supposed to be the sentries guarding the secrets, not the ones opening the gates to them." Kovnats says the OSC's signal to lawyers is: "Keep your mouth shut! But in addition to the Securities Act, which says you're not supposed to share undisclosed mate- rial information or undisclosed changes in material fact, you have a strict duty of confidentiality under the [Rules] of Profes- sional Conduct. Every lawyer is aware of these rules." For law firms, it's a wake-up call, he says. "It's a catalyst for all firms to think about reinforcing the duty of confidenti- ality. The only people who should know about a client's affairs are those people who need to know in order to have the legal services performed for the client." Under common law, Kovnats notes, whatever one partner in a firm knows is imputed to all the partners. But the OSC's Finkel- stein decision stipulated that, for the pur- poses of determining insider trading, it is actual knowledge rather than imputed or deemed knowledge that matters. The Finkelstein case may prompt firms to review how controls are set up so as to create ethical walls. Kovnats says the partners involved in a file must make the decision on who should have access to it. "There are not a lot of bad actors out there, but there may be a need for firms to rein- force the duty of confidentiality by way of an e-mail sent throughout the firm or by way of an educational seminar." The role of technology in the Finkelstein case should give pause to any lawyer who may be tempted to tip. Firms are much more advanced in their ability to track meta-data — information about or hid- den in a document — than they were even five years ago. "There are more trails and traceable footprints in the law office," says Bathgate. "Particularly important in Fin- kelstein was the use of internal document management systems. These systems give wider access to the members of the firm." Tracking meta-data on user access to files — the recording of the date, time, and user ID — creates a data trail for later investigation. In one of the deals on which Finkelstein was found to have tipped — Dynatec Corp. — he didn't even work on the deal, but accessed the files on the doc- ument management system. "The panel found that was a sufficient basis to establish a special relationship even though he wasn't on the transaction," says Bathgate. That's not to say that only lawyers directly working on a transaction should have access to files about it, says Bathgate. "The level of confidentiality for any partic- ular file should be assessed by a law firm on a case-by-case basis. Sharing is legitimate if the right access protocols are in place." L E G A L R E P O RT \ S E C U R I T I E S L AW Consolidated Canada Business Corporations Act and Regulations 2015, 35th Edition contains the complete text of the Canada Business Corporations Act and Regulations, and Industry Canada Policy Statements and Forms that relate to it. New in this edition • The addition of the Canada Not-for- profit Corporations Act, S.C. 2009, c. 23 • Updated version of Corporations Canada Guide 6 – Keeping your Corporation in Good Standing: Reporting Obligations • Updated version of Corporations Canada Guide 13 – Amalgamating Business Corporations • An updated Table of Concordance. New Edition Consolidated Canada Business Corporations Act and Regulations 2015, 35th Edition Available risk-free for 30 days Order online: www.carswell.com Call Toll-Free: 1-800-387-5164 In Toronto: 416-609-3800 Print + ProView Order # L7798-6513BE-65203 $46 Softcover approx. 640 pages May 2014 L7798-6513BE ProView only Order # A22736-15ON-65203 $38 A22736-15ON Print only Order # 986513-65203 $38 978-0-7798-6513-0 Annual volumes supplied on standing order subscription Multiple copy discounts available Shipping and handling are extra. 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