The Ontario Superior Court of Justice, Divisional Court, has issued a decision rejecting Robert Kyle’s appeal of the Ontario Securities Commission’s decision upholding disciplinary action against him and his former firm Derivative Services Inc. (DSI).

In its decision released yesterday, the court noted that considerable deference should be shown to securities commissions. It also ruled that the question of whether its findings were merely “reasonable”, rather than “correct”, is the proper standard for reviewing its judgment. The court found that the OSC’s decision was reasonable in every respect.

The OSC had dismissed an application by DSI and Kyle in which both parties challenged several disciplinary rulings of the district council of the Investment Dealers Association of Canada.

The regulator also affirmed the decision of the IDA council in which it found that DSI and Kyle had engaged in conduct unbecoming by failing to provide documents and information to IDA Enforcement staff in the course of a regulatory investigation.

Kyle sought a judicial review challenging the jurisdiction of the IDA over its members, and raising a number of other important issues, such as whether self-regulators should be considered agents of the government, and whether legal protections such as rules of evidence and the Charter of Rights should apply to them. The court dismissed all aspects of the appeal.

In a statement, the IDA noted that the court ruling fully supports the IDA’s position.

“The court upheld the IDA’s investigative powers, ruling that they do not violate Charter rights and do not involve unreasonable search and seizure,” it said.

“The court also determined that Mr. Kyle, at that time president and CEO of Derivatives Services Inc., an IDA member firm, had unreasonably refused to cooperate with
an IDA investigation. It affirmed the Ontario District Council’s decision that refusal to comply was a serious infraction and that failure to provide information undermined the integrity of the self-regulatory system.”

The IDA also noted that the court ruled that the findings of the ODC on the penalty hearing were “eminently
reasonable and that the fines were responsive to the offence”.