A commissioner has dropped out of the Ontario Securities Commission panel hearing the case against First Leaside Group founder, David Charles Phillips, and senior salesman John Russell Wilson, after they accused the commissioner of bias.
The OSC issued an order Thursday indicating that the hearing against Phillips and Wilson will continue after commissioner James Carnwath withdrew from the panel amid allegations of bias from the respondents.
Phillips and Wilson stand accused of securities law violations that perpetrated a fraud on investors. Those allegations have not been proven, with closing arguments in the case scheduled for Sept. 9. (See Investment Executive, OSC accuses First Leaside founder, salesman of deceiving investors, June 4, 2012.)
However, the order indicates that on July 22, the respondents in the case filed a motion seeking an order that Carnwath, who chaired the panel that heard the case in June, recuse himself “on the basis of a reasonable apprehension of bias”. It also notes that OSC staff maintain that they “have not demonstrated any bias”, and that they are out of time to bring the recusal motion.
Nevertheless, the OSC’s order says, “Commissioner Carnwath, while not accepting the submissions of the respondents in the recusal motion, has recused himself for the sole purpose of permitting the efficient and uninterrupted continuation of the proceeding.”
So, the hearing will proceed with the two remaining commissioners who, it notes, “are satisfied that they have not prejudged the allegations made against the respondents.”