The Ontario Securities Commission has reprimanded well-known financial commentator Brian Costello and ordered him to pay $300,000 of costs incurred by the OSC in its investigation that he violated provincial securities laws.

The OSC said Wednesday it has also ordered that the registration exemption for a publisher or writer of a newspaper, newsletter or financial publication shall not be available to Costello for a period of five years. Costello must also submit to a review of his practices and procedures as an advisor from Nov. 11, 2002 to April 29, the time it took to conduct the hearing into the charges.

In February, a three-person OSC panel found Costello had failed to register as an advisor and had failed to make full disclosure of conflicts of interest contrary to the public interest. However, the commission determined that Costello’s activities did not constitute acts in furtherance of trades.

“The panel found that Costello had not complied with Ontario securities law and had acted contrary to the public interest by engaging in these activities,” the OSC said in its statement Wednesday.

“The evidence repeatedly showed that a principal purpose of Costello’s seminars was lead generation. The standard routine used by Costello included collecting names of participants and distributing marketing material to them, and incorporated various marketing techniques of which consumers and investors should be wary at ‘educational seminars’.

“Good educational material should be balanced and free from marketing bias,” the panel, chaired by OSC vice chair Paul More, said. “It should not serve as bait to lead the unsuspecting to specific securities or service providers.”

“It would be a disservice to investors, and undermine the efforts of conscientious educators, for us to endorse the view presented by counsel for Costello that Costello’s seminars were primarily educational in nature,” said the panel.

“The review we are ordering will determine if he has ceased to be a registrant, and if not, what changes should be instituted regarding his practices and procedures,” said the panel. Further, “if Costello gives advice regarding specific securities in an isolated instance at a future time, it would be appropriate for the Commission to take into account his past practices, including those at issue in this case, in determining whether at such future time he was engaging in the business of advising others. One incident would not be looked at in isolation from what he has been doing in the past.”

The panel did not go as far in its sanctions as OSC staff had asked. Staff had been seeking a trading ban of between three and five years against Costello. But the panel said the conduct that concerned it did not pertain to trading.

In addition, staff had requested that a number of other exemptions not be allowed to apply to Costello. But the panel said in many cases the exemptions were not currently available to Costello and, therefore, did not need to taken away.