Judge gavel, scales of justice and law books in court

An Ontario court has dismissed an appeal of a split decision by the Capital Markets Tribunal in a complex insider trading case involving a couple of advisors, an analyst and a portfolio manager in connection with Amaya Gaming Group Inc.’s acquisition of PokerStars’ parent company.

The Ontario Superior Court of Justice rejected appeals of the decisions of the regulatory tribunal, which found that Majd Kitmitto, a senior analyst with portfolio manager Aston Hill Asset Management Inc.; Christopher Candusso, Kitmitto’s friend; and Donald Alexander Goss, an investment advisor with Aston Hill Securities Inc. breached the prohibitions on insider trading and tipping in connection with Amaya’s 2014 acquisition, and sanctioned those violations.

Kitmitto was banned for 10 years, fined $600,000 and ordered to pay costs of $147,075. Candusso was banned for three years, fined $100,000, and ordered to disgorge $30,782 and pay $73,537 in costs. Goss was fined $1 million, ordered to pay $1.2 million in disgorgement, banned for 15 years and ordered to pay costs of $183,844.

According to the court’s decision, the trio appealed the decision of the majority of the tribunal, which found that they violated securities law.

To that end, they argued that the tribunal’s majority made a variety of errors on both questions of law and facts of the case.

Additionally, Kitmitto and Goss argued that the tribunal imposed excessive sanctions that were punitive and not proportionate to the alleged misconduct, the court said.

Two others who were sanctioned by the tribunal — Steven Vannatta, a portfolio manager with Aston Hill, and Frank Fakhry, an advisor with Aston Hill — filed appeals, but “both of them passed away before the appeal hearing,” the court said.

On the appeals that went ahead, the court upheld the tribunal’s rulings and dismissed the appeals.

Among other things, the court concluded that “the tribunal majority made no reversible errors in their determinations relating to similar fact and bad character evidence in the context of allegations of illegal insider trading and tipping.”

The court also found that, even if this evidence was excluded, it wouldn’t change the majority’s conclusion.

“There was still a wealth of evidence supporting the conclusion that Mr. Kitmitto tipped Mr. Vannatta, Mr. Candusso and Mr. Goss,” it said, finding that there were “no reversible errors” with respect to the tribunal majority’s conclusions on the insider trading and tipping allegations.

It also found that the majority didn’t err in finding that Candusso traded on inside information, a conclusion based largely on circumstantial evidence. And it rejected various arguments from Goss, concluding that there was no reversible error there either.

The court also upheld the tribunal’s decision on sanctions.

According to the decision, Kitmitto asked the court to reduce his ban to seven years and cut his penalty from $600,000 to $90,000, along with a reduction in the costs award.

Goss asked for his ban to be reduced from 15 to 10 years, his penalty to be cut from $1 million to $400,000, and that the costs award against him be reduced too, along with other changes to the sanctions.

However, the court rejected these appeals.

“The arguments of Mr. Kitmitto and Mr. Goss relating to penalty and costs do not meet the high bar for appellate intervention. In large measure, they repeat the submissions they made before the tribunal at the sanctions hearing, which the tribunal considered and rejected after due consideration,” the court said.

It also found that the sanctions weren’t punitive.

“As the Court of Appeal and this court have repeatedly recognized, insider tipping and trading are serious breaches of securities laws that erode public confidence in the capital markets,” it said, adding that there was no error in the tribunal’s methodology in calculating the administrative penalties or the market bans.