The B.C. Supreme Court has sided with the U.S. Securities and Exchange Commission in its bid to question a couple of B.C. lawyers, Herb Ono and Bernard Pinsky, in connection with their involvement with Solucorp Industries.

The SEC applied for an order under the Canada Evidence Act permitting the examination of Ono and Pinsky to obtain their testimony for use in a trial to be heard in New York.

The SEC is the plaintiff in a civil action in the court of the Southern District of New York. The defendants are Solucorp, Joseph Kemprowski, Peter Mantia, James Spartz, Robert Kuhn, Victor Herman, Arle Pierro, W. Bryan Fehr and Glen Ohlhauser, some or all of whom are or were officers and directors of Solucorp.

The SEC alleges that Solucorp and certain of the individual defendants participated in a scheme to defraud investors. The defendants are alleged to have artificially inflated the value of Solucorp’s common stock by publicly disseminating materially false and misleading press releases, periodic reports and correspondence to shareholders and to have made materially false regulatory filings. The case has yet to proven.

Ono and Pinsky are solicitors with the firm of Clark, Wilson in Vancouver. Both provided professional services to Solucorp beginning in 1995. The SEC alleges that Solucorp retained the solicitors to provide advice in relation to certain of the public disclosures and regulatory filings of which the SEC complains.

Ono and Pinsky were interviewed by the SEC in the course of its investigation of Solucorp. Counsel for the SEC advises that the evidence they provided in the course of the investigation is not admissible in the New York trial.

The SEC wants to obtain the solicitors’ testimony in order to contradict certain denials by Solucorp and the individual defendants and to authenticate written communications for use at trial. The SEC wants the testimony to be audiotaped, videotaped and transcribed.

Ono and Pinsky argued that this application should be dismissed “because the request for assistance is unnecessary, overly broad, not supported by evidence and unduly burdensome and prejudicial to them”.

They say that if an order is to be granted, it should be on the following conditions. The SEC should pay their fees for preparation and attendance upfront. The solicitors should be entitled to attend the examinations with counsel. The SEC should provide briefs before the examination. The laws of B.C. should govern the course of the examinations, and the SEC and others to the litigation should be required to provide their written undertaking to keep the evidence confidential and ensure its use solely for the purposes of the trial in New York.

The judge ruled in favour of the SEC’s application, with conditions, and it rebuked the SEC for its conduct. “The principle of paramount concern is that this jurisdiction should endeavour to afford its assistance to other jurisdictions in the administration of their judicial process as a matter of international comity,” said the decision.

But the decision also noted that, “[the SEC should] act with deference and respect for the law and process of the jurisdiction whose assistance it seeks. More should have been done by the SEC and counsel on its behalf in this case.”

The decision notes that the examination must be conducted in accordance with B.C. practice. It ordered that the SEC be obliged to specify the documents in respect of which they will be examined and that the SEC identify the specific matters to which the examination will extend.

The lawyers won’t get their usual fees of between $235 and $325 an hour for preparing for the examination, they’ll receive the basic $20 per day witness fee.