The Court of Appeal for Ontario has upheld an appeal by the Ontario Securities Commission, restoring a 15 year trading ban of former Yorkton Securities Inc. head trader, Piergiorgio Donnini. However, the court also allowed Donnini’s cross-appeal on costs levied by the OSC.

A panel of the OSC found that Donnini had engaged in unlawful insider trading in February 2000. The panel imposed suspended his registration as a securities trader for 15 years and ordered him to pay investigation and hearing costs of $186,052.30.

Donnini appealed all aspects of the commission’s order — liability, penalty and costs. A panel of the Divisional Court then dismissed the appeal from liability, but allowed the appeal of the sanctions imposed and the award of costs, reducing the suspension from 15 to four years. The Divisional Court also directed the OSC to reconsider its costs award against Donnini by following certain specific procedural steps.

The OSC was granted leave to appeal the sanctions and costs components of the Divisional Court’s order.

Donnini cross-appealed with respect to the Divisional Court’s affirmation of the commission’s finding of liability for insider trading. He also cross-appealed on the sanctions issue, taking the position that his suspension should have been reduced from 15 to two years, not four years as the Divisional Court had held.

In its decision handed down Friday, the Court of Appeal for Ontario upheld the OSC’s decision of liability and restored its original 15-year penalty. The appeal court noted that the Divisional Court followed the B.C. Court of Appeal in overturning sanctions that were levied by the B.C. Securities Commission in the Cartaway case. That ruling has since been overturned by the Supreme Court of Canada.

While it granted the OSC’s appeal,.the appeal court also ordered it to reconsider the cost sanction. The courts said the costs imposed by the OSC on Donnini were unreasonable and “cavalier”.