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The Court of Appeal for British Columbia found that the B.C. Securities Commission (BCSC) erred when it allowed asset freeze orders to remain in effect during ongoing investigations despite a lack of evidence that securities law breaches took place.

The court heard three appeals together that sought to overturn BCSC decisions refusing to vary or revoke asset freeze orders.

“The appellants say the commission has taken too broad a view of its discretion, acting without sufficient consideration of factors that should restrain the exercise of its power to freeze assets,” the court explained in its decision.

“The commission takes the position that it has broad discretion that is not restrained by any factor other than the public interest, which it views largely through the lens of protection of the investing public,” the decision said.

Two of the appeals, which involved BridgeMark Financial Corp. and others, were granted, with the court ruling that the BCSC “erred in determining that the asset freeze order could be maintained where the investigation order and evidence did not raise a serious question that the asset owners had committed breaches of the Act that might lead to financial consequences against them.”

The court also found the commission mistakenly put the onus on the respondents in the case, “requiring them to establish with certainty that no breach of the [Securities Act] will be alleged or proven in the future.”

The court found that the onus should be on the regulator to establish that an asset freeze order should be maintained.

In third case, however, the court dismissed the appeal, ruling that “the commission properly considered that there was evidence that the appellants committed serious breaches … that might lead to financial penalties.”

The court also found the BCSC properly considered relevant public interest factors, and that it did not make the same mistake of putting the onus on the respondents to establish that no breach could be proven.

In one of the two cases where an appeal was granted, the court set aside the freeze order imposed by the commission. But the court sent the other case back to the BCSC, noting that the regulator is now raising new allegations against the respondents in that case.

“It is unclear whether there is new evidence, or whether the executive director, faced with these appeals, has now tried to articulate a way in which the previously known evidence supports allegations that these parties breached the Act,” the court said.