Toronto businessman Vic Alboini has been ordered to pay nearly $560,000 and stripped of various professional credentials for up to two years — although Alboini says he plans to appeal the ruling and hopes to have all of the allegations and sanctions dismissed by an Ontario court.
The sanctions, announced Friday by the Ontario Securities Commission, were substantially less than what had been requested by the OSC’s enforcement branch and an investment industry disciplinary body known as IIROC. (See Northern Securities chief suspended, fined by IIROC, investmentexecutive.com, November 13, 2012.)
An OSC panel headed by OSC vice-chairman James Turner ordered Alboini to pay a $250,000 fine to the Investment Industry Regulatory Organization of Canada, give back $244,985 in commissions that he received for his work at Northern Securities and pay $62,500 for costs incurred by IIROC.
The OSC panel also suspended all of Alboini’s investment industry registrations for one year and his higher-level UDP designation for two years.
The OSC panel had been asked to impose a permanent removal of Alboini’s designation as an ultimate designated person, which allows him to head a registered securities brokerage, as well as a two-year ban on all of his other industry registrations and a total of more than $718,000 from him, including a $500,000 fine to IIROC.
IIROC is a national self-regulating organization for investment dealers that sell stocks, bonds and other securities to clients. It shares responsibility for policing activities by member companies and their employees with other organizations, including provincial commissions such as the OSC.
The OSC previously found, among other things, that Alboini was in a conflict of interest as chief executive officer of Northern Securities Inc. and as a shareholder and CEO of Jaguar Financial Corp. (TSXV:JFC).
Alboini said Friday that he has already filed an appeal to Ontario divisional court against an OSC decision on the allegations against him issued in December 2013. He said that appeal will be amended to include reasons for appealing the sanctions announced Friday.
“We are going to be requesting that all of the proceedings be dismissed,” Alboini said in a telephone interview.
He said there are a number of grounds for the appeal, most importantly that the $16 million of client money at the heart of the allegations “was always there.”
“That has been ignored, all the way up so far,” Alboini said.
“The second item was the incredible bias displayed by the IIROC panel,” he said. “The most important bias was that they refused to give us reasons for their judgment (on the merits) and we walked into an IIROC sanctions hearing without their reasons. That is so incredibly inappropriate that that should be fatal to the IIROC proceedings.”
“In other words, they should be dismissed. That will be our position.”
The OSC also imposed lesser sanctions on two men and Northern Securities, which has suspended operations as a securities dealer and now operates as an investment bank and advisory firm called Added Capital, headed by Alboini.
Northern Securities was ordered to pay a $50,000 fine to IIROC and $10,000 towards its costs. It suspended Frederick Vance, Northern’s chief compliance officer, from working as a supervisor for three months. It ordered that Douglas Chornoboy, Northern’s former chief financial officer, be reprimanded but overturned all other penalties against him.
Most of OSC’s sanctions against the three men and the company were less than what was imposed by IIROC. It originally imposed $450,000 of financial penalties against Northern Securities, $100,000 against Vance and $40,000 against Chornoboy.
The IIROC’s ruling was appealed to the OSC, which in a merits decision issued in December 2013 upheld many of the IIROC panel’s decisions but concluded that the IIROC panel’s conduct was procedurally unfair to Alboini when it determined costs and sanctions.
Alboini has been a long-time activist investor who, in the past, was an outspoken advocate for restructuring Research In Motion, now called BlackBerry (TSX:BB).
He also was the driving force at Lakeside Steel of Welland, Ont. — a pipe and tubing company that was later purchased by a Chicago company — when the IIROC investigation of his activities at Northern Financial was announced in August 2011.