The Investment Industry Regulatory Organization of Canada has won its bid to quash a judicial review sought by one of its members facing a disciplinary hearing by the self-regulatory organization.
Ontario’s Divisional Court has sided with IIROC in a case where the SRO sought to quash an application for judicial review brought by Hampton Securities Ltd., and its president and CEO, Peter Deeb, who were named as respondents in a disciplinary hearing last September. That hearing has yet to take place, and none of the allegations have been proven.
According to the Divisional Court decision, on Nov. 3, 2011, Deeb and Hampton initiated an application for a judicial review, seeking an order quashing the notice of hearing issued by IIROC; compelling IIROC to retract a Business Conduct Report that was issued following a review of the firm, to produce three anonymous letters that led to the regulator’s investigation of the firm; and, setting aside the “close supervision” that Deeb had consented to. IIROC then sought to quash that motion for a judicial review.
The SRO argued that the application for judicial review should be quashed because there is no jurisdiction to hear the application as its investigation and disciplinary process arises out of contractual powers, not statutory powers. And, it says that the application for judicial review is premature.
The decision says that the firm’s position was that IIROC “has behaved in an unfair and secretive fashion”; that IIROC derives its authority to regulate from a recognition order requiring that its disciplinary process must be fair and transparent; that IIROC is not a private body but part of the machinery of government; and that its application for a judicial review is not premature because IIROC has admitted that it does not have jurisdiction to grant all of the relief requested.
On the issues of jurisdiction and prematurity, the court sides with IIROC. It notes that IIROC is not created by, and does not derive its authority, from statute, but from contractual arrangements. “IIROC hearing panels remain subject to the duty of procedural fairness but that duty is enforceable in applications to the hearing panels themselves,” it says, concluding that there is no jurisdiction for the court to hear the application because the disciplinary and investigative steps the firm is complaining about arise from contractual powers and not statutory powers or other public authority.
And, the decision says, even if it’s wrong on the jurisdiction issue, the application for judicial review should be quashed “because there are ongoing proceedings before a constituted IIROC hearing panel and the application for judicial review is premature.”
The court says that all of the issues raised by the application should first be determined by an IIROC hearing panel. It says that a panel should decide on the merits of any request to quash the notice of hearing and to produce copies of the three complaint letters. “I accept the submission of IIROC that the Business Conduct Report is in the nature of an administrative matter or investigative step and in any event, it is open to the hearing panel to stay the proceedings for abuse of process if appropriate,” it says; and it notes there is no decision to be reviewed on the issue of “close supervision”, as this was arrived at on consent. As a result, it grants IIROC’s motion to quash the application for judicial review.
On Jan. 18, IIROC announced that it had scheduled a hearing for Jan. 23 to hear a motion seeking an order requiring IIROC staff to remove all references to the notice of hearing from the IIROC website.