Divisional Court upholds Commissions decision not to revoke settlement agreement

Posted by:

In a recent Divisional Court decision (January 11, 2013), the Ontario Superior Court of Justice denied the Appellant’s appeal to set aside an earlier order of the Ontario Securities Commission approving a settlement he had entered into with the staff of the Commission.

The Appellant, Andrew Rankin, was charged with insider trading and tipping under sections 76(1) and (2) of the Securities Act. It was alleged that he had given confidential information obtained through his employment at RBC Dominion Securities Inc. to his childhood friend, Daniel Duic, which Duic used to purchase securities. Duic was also charged with insider trading but entered into a settlement agreement with the Commission. He was the key witness in the prosecution against Rankin.

Proceedings were commenced against the Appellant, Rankin, both in the courts as well as administratively. Initially, Rankin was convicted of tipping (but acquitted of insider trading) and sentenced to 6 months in jail. The convictions were appealed and a new trial was ordered. Rankin eventually entered into a settlement agreement, which disposed of both the quasi-criminal charges and the administrative proceedings against him. During the negotiations with Enforcement staff, Rankin became aware, through his counsel, that Duic had been charged again for breaching the terms of his settlement agreement. No further disclosure was given to Rankin regarding Duic’s new charges and Rankin went on to finalize his settlement agreement.

Rankin later brought an application pursuant to section 144 of the Securities Act before the Commission to revoke the settlement agreement. One of his arguments to have the settlement agreement overturned was that Enforcement staff did not provide proper disclosure to him regarding Duic’s new charges. Rankin argued that he was deprived of “crucial information” that would have affected the outcome of the administrative proceeding. His application was dismissed by the Commission. Rankin appealed to the Divisional Court. In a 2 to 1 decision, the Divisional Court dismissed his appeal. The majority held that the standard of review of the Commission’s decision was that of reasonableness. It also found the decision to be reasonable, holding there was no unfairness to the Appellant, Rankin, and that no reasonable person would have run the risk of a second criminal trial or the administrative proceeding based on the additional information. Matlow J. dissented, holding that the standard of review was correctness and that the Commission erred in its denial of Rankin’s application. He would have allowed the appeal. Read the decision here.


About the Author