The Ontario Superior Court of Justice, Divisional Court, has dismissed an appeal from North American Financial Group Inc., North American Capital Inc., and Alexander Flavio Arconti and Luigino Arconti, the brothers who founded the firm.

The appeal sought to overturn a pair of Ontario Securities Commission (OSC) hearing panel decisions. The first, in 2013, found that the companies and the two founders committed securities fraud. The subsequent penalty decision in 2014, imposed involved lifetime bans, $3 million in disgorgement, and ordered $2 million in penalties and costs.

According to the court’s decision, the appellants argued that the finding of fraud and the penalty decision were unreasonable. Among other grounds for appeal, they alleged bias on the part of an OSC commissioner, and that their own lawyer in the hearing failed to adequately represent them because he had a conflict of interest in that his firm also acted for the OSC on an unrelated case.

The court dismissed the appeal, and in its decision, ruled the appellants did not prove that there was any miscarriage of justice in the regulator’s proceeding against them.

The court also found that the OSC hearing panel’s finding that the appellants committed fraud was reasonable based on the evidence. “Reading the commission’s decision as a whole, it is clear that implicitly it found that the non-disclosure in issue objectively rose to the level of dishonesty and this finding can be easily justified on the basis of the record before it,” the court wrote in its decision.

“Simply put, there is no merit to the suggestion that the commission failed to weigh the Arcontis’ evidence on the points in question. The commission weighed their evidence and did not accept it. The appellants are asking this court to reweigh the same evidence, something that is not our task as an appellate court,” the court wrote.

The appellants also argued that the sanctions handed down in the case were too severe. The court again sided with the OSC, stating that the penalties were not excessive.

“It is not unreasonable to decide that in order for that confidence to be restored the message must be sent that misrepresentation and non-disclosure that amounts to fraud will be punished severely. That is what the commission did in this case,” the court concluded.