British Columbia’s appellate court has rejected an appeal from Research Capital Corp. which sought to overturn a penalty levied by the B.C. Securities Commission.

Research Capital sought leave to appeal an order of the commission reprimanding the firm, and ordering it to prepare a report on changes it has made to its compliance systems to prevent its reps from trading in contravention of BC cease trading orders. It also had to pay an administrative penalty of $40,000.

The order, issued after a hearing, arose from an inadvertent contravention of a cease trading order, which had been issued by commission staff. The firm admitted the contravention.

The BCSC accepted that the breach was inadvertent and that the same breach was committed by a substantial number of other investment dealers. So, the hearing dealt only with the issue of penalty.

The proposed appeal was directed primarily against the part of the order which imposed a reprimand and made the firm’s registration conditional upon it making improvements in its compliance systems.

Research Capital argued that the reprimand and compliance improvement part of penalty was unfair because it believed that the hearing would be confined to the amount of penalty and that it had no notice of the possibility of the restrictions and directions for change in its compliance system being imposed.

The BCSC said it gave sufficient notice and that the decision was highly fact specific, and was unlikely to have any value as a precedent. The court agreed, saying, “I agree with the submission that the adequacy of the firm’s compliance procedures was the fundamental issue in the hearing. That would seem to be reasonably apparent from the notice of hearing issued by the executive director … “