The Court of Appeal for Ontario has denied an investment firm leave to appeal an earlier decision rejecting the firm’s bid for a judicial review of a decision of the Ontario Securities Commission (OSC).

Back in April, the Divisional Court of the Ontario Superior Court of Justice rejected an application by Deutsche Bank Securities Ltd. for a judicial review of a decision of the OSC from Sept. 30, 2011, in which the commission dismissed the firm’s application for a hearing and review of a decision of a hearing panel of the Investment Industry Regulatory Organization of Canada (IIROC) from Oct. 13, 2010.

Deutsche Bank Securities fails to halt IIROC hearing

In that decision, the IIROC hearing panel refused to dismiss or stay a notice of hearing against the firm, which faces allegations concerning its involvement in the freezing of the Canadian market for non-bank sponsored asset-backed commercial paper (ABCP) back in August 2007.

A number of other firms settled allegations against them with the OSC and IIROC, but Deutsche is contesting the allegations, which have not been proven.

IIROC charges that the firm failed to act fairly, honestly and in good faith by not disclosing information relating to the U.S. subprime and the liquidity risk in third party ABCP, and that it failed to ensure proper oversight of third party ABCP.

In Sept. 1, 2010, the firm brought a motion before the IIROC hearing panel seeking to dismiss or stay the proceedings on the basis that it would be denied procedural fairness, because a hearing panel of IIROC cannot compel the attendance of witnesses if they are not IIROC members or employees of members. The firm argued that it would be deprived of the ability to make full answer and defence to the allegations.

The IIROC hearing panel denied that motion, and a subsequent OSC hearing rejected the firm’s bid for a review of that decision. Deutsche then appealed that decision to the Divisional Court, which found that the commission “reasonably concluded that the application before it should be dismissed because of prematurity.”

Now, the Ontario Court of Appeal has denied leave to appeal that decision, clearing the way for the IIROC hearing to proceed.