Canada – CSA Activist Short Selling Concerns

Canada – CSA Activist Short Selling Concerns

On 3 December 2020, CSA consulted on activist short selling impact on markets.

  • CSA issued consultation paper to facilitate discussion of concern re activist short sales.
  • The paper sets out findings from CSA research, on the subject, which began in 2019.
  • Summarizes stakeholder concerns, Canadian and international regulatory frameworks.


  • Activist short selling involves taking a short position in a security and then publicly sharing information that is expected to negatively impact a company’s stock price.
  • Concerns raised over less strict Canadian regulations compared to other jurisdictions.
  • Also that there is inadequate deterrence due to limited number of enforcement actions.

Key Research Findings

  • Activist short sellers gravitate to securities where there is perceived overvaluation.
  • Between 2010-2020, 73 Canadian issuers were target of 116 activist short sellers.
  • About 75% of Canadian campaigns analyzed experienced a negative price impact on the day of the first campaign announcement and up to one month afterwards.
  • 40% involved allegations of fraud at the issuer, most often stock promotion scheme.


  • Comments on the consultation paper must be submitted by 3 March 2021.