The Ontario Securities Commission (OSC) has denied a prominent Bay Street lawyer’s efforts to have tipping case against him stayed.
The OSC handed down its decision today on a motion brought by Mitchell Finkelstein, an M&A lawyer at Davies Ward Phillips & Vineberg LLP in Toronto, who is accused of insider tipping in six M&A deals. The case has not yet been heard, and the allegations have not been proven. Finkelstein was seeking to have the case against him stayed, and brought a motion to that effect in July 2011.
According to a decision handed down Thursday, denying that motion, he argued that OSC staff “carried out its investigation in a manner which violated both its duty to act fairly”, and his, “fundamental right to a fair and proper ‘Wells Process’.” The Wells Process was introduced in the U.S. to allow respondents an initial opportunity to respond to potential allegations against them before being formally charged. He also alleged that OSC staff failed to provide sufficient time and details of its case to enable him to respond to enforcement notices sent to him before it issued allegations against him.
OSC staff argued that prospective respondents do not have a right to receive an enforcement notice prior to the issuance of allegations, and that the Wells Process used by the US Securities and Exchange Commission (SEC) is not required in Ontario.
In its decision, the OSC hearing panel concludes that a ‘Wells Process’ is not required in Ontario. “We are satisfied that the formalities of the U.S. ‘Wells Process’ and its requirements do not apply to the investigative stage of OSC administrative proceedings. Finkelstein has no legitimate expectation that the ‘Wells Process’, as understood in the U.S., will be followed in Ontario,” it says.
It also finds that there was no abuse of process in the case, and that there’s no evidence that OSC staff acted in bad faith. It also says that the investigation hasn’t affected Finkelstein’s ability to have a fair hearing in the case.
“In light of the serious allegations of insider trading and tipping in this matter, we believe that the harm to the public in not having this matter heard and adjudicated on the merits outweighs any alleged damage to the public interest in the fairness of the administrative process caused by staff’s actions with respect to the enforcement notices,” it says.
Finkelstein also requested that he be awarded the costs of the stay motion, which was also rejected by the panel, saying it agreed with OSC staff’s submissions that it does not have jurisdiction to award costs.