(January 6 – 16:10 ET) – A three-member panel of the Ontario Securities Commission has dismissed a motion to remove the OSC’s staff litigator from an enforcement action against YBM Magnex International Inc.

The panel’s decision was released today following a two-day hearing last month on a motion filed by counsel for David Peterson, a Director of YBM.

“A Notice of Motion filed by Peterson counsel sought OSC orders compelling extensive production of documents, as well as the removal of Mr. Naster as litigation counsel for Staff due to his role in the determination to take receipt of YBM’s final prospectus,” states the Panel’s decision.

“Counsel for Staff submitted that there is apparently no reported case, nor a case that has not been reversed on appeal, where the defence has ever succeeded in removing Crown counsel on the basis of being a witness. Counsel for the Applicant did not direct us to any contrary authority.”

“We are not persuaded that Mr. Naster’s knowledge concerning YBM is not shared by others who can testify, should the circumstances require it. If Staff’s knowledge becomes a fact in issue in this matter, the director, being the decision maker under s. 61 of the Act, and other Staff, past and present, have significant knowledge of the facts associated with the issuance of receipt to YBM,” wrote the Panel. “In addition, we are not persuaded that Mr. Naster’s state of knowledge could not be stipulated or admitted based on the materials disclosed in the six Affidavits filed in the Divisional Court. Consequently, the Applicant has not met this test.

“Staff counsel should be removed only in clear cases.” OSC counsel “indicated that he will not subpoena Mr. Naster.” Petersen’s counsel “indicated that it is doubtful that he will subpoena Mr. Naster. Further, there is an insufficient basis for us to make a determination as to relevance at this time. Accordingly, it is only at the hearing that the necessity of Mr. Naster’s evidence can be tested. We are of the opinion that this motion is premature,” ruled the Panel.

A one-day hearing to hear additional motions related to the case has been set for Thursday, January 27, 2000, at 10.00 a.m. in the main hearing room of the Commission located on the 8th Floor, 20 Queen Street West, Toronto, Ontario.
-IE Staff