The Ontario Securities Commission has issued a Notice of Hearing and Statement of Allegations as against Phoenix Research and Trading Corp., Ronald Mock and Stephen Duthie.

Phoenix Resarch was registered with the OSC as an investment counsel and portfolio. Mock was the firm’s CEO and president. He ran the Phoenix Fixed Income Arbitrage Limited Partnership, a hedge fund. Commencing in the fall of 1998, Duthie was responsible for PFIA LP’s U.S. dollar portfolio under the direct supervision of Mock. Duthie has never been registered with the commission.

PFIA LP collapsed in early January 2000 when Phoenix Canada discovered that Duthie had accumulated a US$3.3 billion long position in U.S. 6% treasury notes due August 15, 2009. The notes were not hedged and caused a significant overdraft position at the Bank of New York. PFIA LP was forced to liquidate its assets. The resulting loss to PFIA LP exceeded $120 million.

OSC staff alleges that Duthie engaged in registerable activity for which he was not registered with the OSC; and acted contrary to the best interests of Phoenix Canada’s and his clients.

Staff alleges that Mock failed to keep the proper records, failed to implement and monitor appropriate controls, and failed to adequately supervise his staff.

OSC staff say that under adequate supervision Duthie’s activities would have been detected and the collapse of PFIA LP avoided.

A date for the hearing has yet to be scheduled.