While four years is an “inordinate delay” for the investigation of potential wrongdoing, the delay itself has not inflicted any harm to the former rep at the centre of the investigation, a regulatory hearing panel has ruled.
A hearing panel of the Canadian Investment Regulatory Organization (CIRO) denied a motion from Darren Clayton Carrigan that the investigation into a complaint against him be permanently stayed.
The threat of enforcement action has been hanging over Carrigan’s head since November 2020, when he was advised that the self-regulatory organization’s enforcement department had received a complaint against him alleging a conflict of interest based on his outside business activities in the cannabis sector.
In April 2021, the organization said it was investigating the complaint. In August 2021, Carrigan’s counsel was advised that the investigation was nearly complete. And, when they followed up the next year, they were told the investigation would be wrapped up within “the next couple of weeks.”
Finally, in April of this year, his counsel received a draft statement of allegations and an invitation to make a settlement proposal. Still, though, no formal allegations had been made.
The panel said that he argued that this delay has harmed his ability to work as a rep, that he was terminated from his last position due to delays in his CIRO registration caused by the ongoing investigation, and that this reputation and finances have also been harmed.
First, the panel had to agree to hear Carrigan’s motion, which raised a novel question of jurisdiction, given that enforcement proceedings haven’t been initiated.
Ultimately, the panel concluded it was in the interests of justice that Carrigan be given an opportunity to be heard.
It rejected the SRO’s argument that there’s a six-year limitation period on enforcement proceedings, so a target of an investigation can’t complain about delay before the six years is up. “The limitation period does not address the issues of prejudice and abuse of process prior to expiry of six years,” it argued.
The panel found that there had indeed been an “inordinate delay” in this case. It further said that Carrigan hadn’t contributed to the delay, and that he had cooperated with the investigation.
“Throughout the investigation, Mr. Carrigan has denied any wrongdoing and has cooperated with enforcement staff by providing, through counsel, such information as was requested and sitting for interviews,” the panel noted.
However, it also found that it’s difficult to attribute harm to Carrigan solely due to the delay itself, and not to the fact that he was under investigation.
“There is no question that the delay in bringing this matter to a head has caused prejudice to Mr. Carrigan or, at least, has exacerbated the prejudice caused by the complaint, the commencement of the investigation, the restrictions imposed by the registration subcommittee and the threatened refusal of registration by the OSC,” the panel said. “However, it is difficult to isolate the prejudice directly attributable to the delay in issuing the notice of hearing.”
Given that he failed to establish that the delay in the investigation caused harm, the panel ruled, “there is no abuse of process that would justify a stay of the investigation.”
As a result, it dismissed the motion. But it also directed CIRO to get on with the enforcement proceeding, if that’s what it intends to do.
“This matter cannot drag on indefinitely,” it said. ‘The investigation appears to be substantially complete, and enforcement staff need to either issue a notice of hearing or formally close its investigation in the near term,” it concluded.