The Ontario Securities Commission (OSC) has upheld an appeal from a brokerage firm branch manager who challenged a penalty decision that was handed down by an Investment Industry Regulatory Organization of Canada (IIROC) hearing panel, sending the case back to IIROC for a new hearing.

The OSC issued its decision Monday in a case where a branch manager, Bryan Andrew Vickers, appealed the penalty imposed by an IIROC hearing panel for admitted supervisory failures. Vickers had admitted to failing to adequately supervise a registered rep that inappropriately recommended certain inverse exchange-traded funds to clients.

Following a sanctions hearing, the IIROC panel ordered that Vickers be fined $30,000, suspended from acting as a supervisor for six months, and that he must re-write the supervisor’s course before becoming a branch manager once again.

Vickers appealed the sanctions decision to the OSC, arguing that the panel had reached its decision based on evidence that was not part of the agreed statement of facts in the case; that its reasons were inadequate; and, that the sanctions are disproportionate to the conduct in question.

See: OSC to hear ex branch manager’s appeal

According to the OSC’s decision, Vickers argued that the IIROC hearing panel “found” contraventions that went beyond the agreed facts, and that it was not entitled to do this. Specifically, he noted that the panel referred to regulatory guidance on the risks of these sorts of ETFs that was not part of the agreed facts; and, that there was no evidence that Vickers had knowledge of this guidance in the agreed facts.

IIROC argued that the reference to the guidance does not constitute an error requiring the entire sanctions decision to be overturned.

OSC staff submissions in the case sided with Vickers. They argued that when an agreed statement of facts is put before a court or administrative tribunal, that both sides, and the adjudicator, are bound by those facts and cannot depart from them. As a result, OSC staff concluded that the panel erred by relying on the guidance; and, they recommended that the commission should send the issue back to a newly constituted IIROC hearing panel.

The commission agreed, ruling that, “It was inappropriate for the IIROC hearing panel to have considered the guidance note and it is clear that the panel ascribed some weight, possibly significant weight, to what the panel described as the consequences of Vickers’s knowledge of what the guidance note stated or his failure to have such knowledge, neither of which were addressed in the agreed statement of facts.”

As a result, the OSC found that the IIROC hearing panel should not have considered the guidance, and that its reasons for its decision were not adequate. As a result, the commission set aside the decision, and ordered that a new hearing panel reconsider the appropriate penalty.