The British Columbia Court of Appeal has upheld a decision of the B.C. Securities Commission in shutting down an alleged boiler room.

In the case, a group of employees at an alleged boiler room — Jeffrey Mitchell Seabrook, Jon Stanbrough, Rylie David Ableman, Altaf Goolab, Richard Cartledge, Adrian Ting Lee, David Strong, Aaron Leslie Evans, Raymond Wong, Raymond Christopher Dove, Andrew David Greig, Matthew Mitchell Phillips, Daniel Ross Warburton, Peter Forward and Travis Brian Arnold — applied for leave to appeal a BCSC decision that blocked them from trading or engaging in investor relations. They also sought a stay of the order pending a proposed appeal.

The BCSC executed a search warrant at a business in Vancouver, turning up evidence of what the BCSC’s executive director alleges is a “boiler room” brokerage. The applicants, none of whom are registered under the Securities Act, were found in the room manning the telephones.

The executive director of the BCSC then exercised his authority by making a series of temporary orders effectively prohibiting the applicants from trading in securities and from engaging in investor-relations activities. In December 2002, a hearing panel granted a temporary order pending the hearing substantially in the terms imposed by the executive director.

The applicants sought leave to appeal the order on grounds that the panel erred in law: in admitting the affidavit of an investigator in the enforcement division of the commission; in concluding that there was prima facie evidence that the applicants contravened the act; in concluding that there was a sufficient evidentiary basis to determine that it was “necessary and in the public interest” to extend the temporary order; and, in extending the temporary order without considering whether the extension was “necessary.” Counsel for the applicants refined his position on evidence to argue that the panel had no evidentiary basis for the order.

The court found in the BCSC’s favour. It noted, “Whatever might be said about the quality of the evidence considered by the panel in the first instance, the later evidence makes out a strong prima facie case that the applicants were engaged in a boiler room operation contrary to the Act.

“Consequently, even if I were to grant leave and impose a stay on the temporary order, the panel could make a new order on the basis of the augmented record and the applicants would be no further ahead.

“In any event, and new evidence aside, I have not been persuaded that the applicants raise a question of law. The real issue they propose to argue is the sufficiency of evidence. I cannot say in my reading of the record before the panel in the first instance that there was no evidence supporting the order. The applicants are left with the argument that the panel found the wrong facts and drew the wrong inferences, a position unlikely to succeed given the reluctance of this court to interfere with the commission’s fact finding.”