An Ontario Securities Commission panel has accepted the settlement in the Michael Cowpland case that it rejected back in the spring.

The three-member OSC panel said that, “After lengthy and difficult deliberations and in view of all the circumstances, the panel accepts the joint recommendations of counsel as in the public interest.”

As a result, Cowpland and his firm, MCJC Holdings Inc., received a reprimand and must pay $500,000 to the Investor Education Fund. The firm was ordered to pay $75,000 to the commission to cover its costs, and Cowpland was prohibited from acting as a director of a reporting issuer for two years.

In February 2002, OSC staff, Cowpland and MCJCreached an overall settlement on allegations including quasi criminal charges laid by the OSC before the Ontario Court of Justice and the notice of hearing. As part of the settlement, MCJC pleaded guilty to insider trading with knowledge of an undisclosed material fact and was fined $1 million, and the charges against Cowpland were withdrawn.

On the same day the settlement agreed between staff and the respondents with respect to the commission hearing was brought before the commission for approval but was not approved, “as there were insufficient facts for the panel to make a decision”. A new hearing was brought forward on October 20 with additional factual disclosure, and further material was added at the panel’s request.

In its decision, the panel said, “Instead of being a model and example for corporate governance, Mr. Cowpland has brought a shadow over himself, and his enterprises.”

It also warned that if this conduct taken place after the amendments to the Ontario Securities Act in April 2003, in view of the new powers to order administrative penalties and to order the disgorgement of amounts obtained as a result of non-compliance, “the sanctions ordered by this panel may have been much more severe”.

However, it found, “In view of the fact that the trades in question took place in 1997, the notice of hearing in 1999, and the settlement in 2002, and the delay in this hearing not coming forward earlier was not solely attributable to the respondents. Staff considered that it would be unfair to consider whether or not the new powers were retroactive… In these special circumstances, unique to this case, the panel agreed that the appropriate order would be made under the powers that existed at the time of the offence in 1997 without entertaining argument that some of the new powers might be retroactive.”