Ontario Tribunal Finds Marks Unsuitable for Exchange-Listed Issuer Association After Inadequate CSE

Key Takeaways

• In Marks v CNSX Markets Inc (2026 ONCMT 30), the Capital Markets Tribunal found the Canadian Securities Exchange Board Panel's reasons inadequate and legally flawed.
• It then decided suitability afresh and concluded that Jack Marks is unsuitable to be associated with New World Solutions Inc.
• Compliance teams at issuers, advisors, and exchanges should note the Tribunal's scrutiny of exchange suitability processes and the weight given to overly promotional conduct.

Deep Dive

The Tribunal (published in OSC Bulletin Vol. 49, Issue 35, September 3, 2026; decision dated August 28, 2026) set aside deference to the CNSX Board Panel's May 21, 2025 decision because its reasons were inadequate and proceeded on an incorrect principle with errors of law. The Tribunal then reviewed the matter fresh, relying only on the evidence available to the Board Panel and declining new evidence from both Marks and the Exchange. It concluded Marks is unsuitable to be associated with New World. The excerpt provided is truncated, so the full procedural fairness findings and any remedy details should be confirmed in the complete decision.

The decision highlights how CSE Policy 2 operates. Sections 2.16 and 2.17(a) address sanctions and regulatory settlements, while s. 2.18 lets the Exchange deem a person unacceptable where association raises investor protection concerns, could bring the Exchange into disrepute, or is in the public interest. The Exchange's 1998 SEC settlement concern was treated as insufficient alone given the passage of time. The more recent overly promotional posts and activity on websites, social media, and investor forums were the significant aggravating factor. The Tribunal also criticized the Exchange's failure to communicate its January 2024 unsuitability finding to Marks, calling its explanation questionable. It further noted that the Exchange's later assessment could be read as merely confirming the earlier finding.

Control person disclosure is another practical lesson. The Exchange initially did not object to the New World transaction based on written confirmation that Marks would hold just under 20%. The post-closing news release showed 22.9% ownership, a new control person, and appointment as board chair. Issuers must ensure that pre-transaction representations to the Exchange are accurate and that shareholder approval requirements tied to new control persons are properly assessed. The Tribunal also upheld a hybrid hearing format: in-person for the panel and parties, with remote participation available, finding no procedural unfairness.

Recommended actions: (1) review third-party and promoter due diligence, including IR providers, for regulatory settlements and promotional content history; (2) keep Personal Information Forms current and respond to Exchange offers to update them; (3) verify shareholding and control person calculations before and after transactions and escalate discrepancies; (4) for exchange and SRO compliance functions, ensure suitability decisions are documented contemporaneously, communicated to affected persons, and supported by adequate reasons; (5) monitor the CSE's response and any further appeal activity. Risk impact is moderate to high for issuers associated with promotional individuals, since the Exchange may object to roles such as officer, director, promoter, or holder of more than 10%.

Source: Ontario Securities Commission