The Ontario Securities Commission has upheld an earlier decision by Market Regulation Services Inc., ordering the removal of Stikeman Elliott LLP as counsel to Credit Suisse First Boston.

CSFB retained Stikeman to represent it in connection with an investigation an enforcement initiated by RS against the firm. However, RS alleged that Stikeman was in a conflict of interest position in acting for CSFB due to the nature of the defences it raised because Stikeman had advised the Toronto Stock Exchange on its demutualization, the incorporation of RS and the transfer of regulatory authority from the TSE to RS. RS maintained that those defences should be withdrawn or Stikeman could not continue to act.

The OSC found that there was a “nexus” between the issues raised by CSFB in the RS proceeding and the legal matters considered by Stikeman under the TSE retainer. The panel found that Stikeman could not demonstrate that they would not use relevant confidential information in the CSFB retainer.

The commission also said that the end of the solicitor-client relationship doesn’t necessarily end the fiduciary duty prohibiting a lawyer from acting disloyally. The commission agreed with the RS hearing panel that Stikeman was not prevented from acting against RS in general, but that Stikeman could not, in acting for CSFB, attack the very legal advice that it had previously provided to the TSE.

The OSC agreed with RS that Stikeman’s removal was necessary to preserve public confidence in the administration of justice. The failure to so order would be viewed by the public as a failure to uphold the principle that “justice should not only be done but should be seen to be done.”