An Ontario Securities Commission (OSC) hearing panel ruled on Wednesday that the OSC doesn’t have the jurisdiction to revisit the terms of a regulatory enforcement order, absent a mistake in that order.
The ruling stems from an application by Global RESP Corp. and Global Growth Assets Inc., which are required to appoint a new “ultimate designated person” (UDP) for the firms as a result of enforcement proceeding in 2014.
The firms’ previous UDP, Issam El-Bouji, was suspended as a result of that proceeding and is banned for nine years from serving as a director or officer of a registered firm.
Read: OSC settles with Global RESP and officers
According to the OSC hearing panel’s decision, the firms complied with the order and appointed a new CEO and UDP, but that person is now planning to leave, and the firms are seeking to have El-Bouji’s daughter take over as UDP. However, OSC staff opposed that application on the basis that she’s not independent of her father.
“Staff says that until the end of the nine-year prohibition against Mr. Bouji, any new UDP must be independent, at least while Mr. Bouji continues to play an active role in the firms,” the ruling states.
The Global firms disagreed with OSC staff’s position and sought an order from the OSC confirming that the enforcement order doesn’t require their UDP to be independent of El-Bouji until his nine-year ban expires and ordering that El-Bouji’s daughter’s registration as UDP be allowed.
OSC staff argued that the OSC does not have jurisdiction to consider the motion because the 2014 enforcement proceeding has concluded, and the issue should instead be addressed at a hearing on her registration application.
The OSC hearing panel only considered the issue of jurisdiction, and not the merits of the firms’ motion. It sided with OSC staff, concluding that the commission does not have jurisdiction to revisit the enforcement order.
“Once a matter has ended, the tribunal has no further jurisdiction, subject to limited exceptions,” the OSC hearing panel says in its reasons.
“Normally, a tribunal loses jurisdiction at the end of a proceeding,” the OSC’s hearing panel says, noting that this approach “promotes the expeditious resolution of disputes, the finality of proceedings, certainty for those affected by the tribunal’s decisions, and conservation of adjudicative resources.”
The OSC hearing panel also considered whether the circumstances of this case warrant an exception to that general principle; but again, it concludes that it does not, as there was not an error in the original order that needs to be fixed.
The decision notes that OSC staff “has been inconsistent about the reasons for its position” on whether El-Bouji’s daughter can take over as UDP for the firms.
Although the decision indicates that the OSC hearing panel has sympathy with the firms in this case, ultimately, “those concerns cannot clothe the commission with jurisdiction it does not have.”
Instead, the decision states that El-Bouji’s daughter should go through the process of seeking registration as the firms’ UDP and that any objection from OSC staff can be addressed that way.
“The proper venue for Ms. Bouji to challenge staff’s objection to her application is before the director. Ms. Bouji may get a favourable decision. If she does not, she may then require a review of that decision before the commission,” the hearing panel’s decision says. “Her objection to staff’s position does not give her a basis for having the commission resolve the dispute now.”
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