A hearing panel of the Investment Industry Regulatory Organization of Canada (IIROC) has found in favour of legendary trader David Berry, dismissing a disciplinary case against him after a protracted legal battle.

On January 14, a hearing panel ruled that IIROC had failed to make its case against Berry, and dismissed the charges against him.

The panel’s decision brings an end to a long-running legal saga that began with an investigation by IIROC predecessor Market Regulation Services Inc. (RS) in 2005, charges from RS in 2007, and wound its way through several hearings before IIROC, the Ontario Securities Commission (OSC), and the courts.

Once efforts to have the proceedings stayed were finally rejected by the Court of Appeal for Ontario in 2011, the case finally went to a hearing, which was carried out on various dates in September, October, and December of 2012. The panel vindicated Berry by dismissing the charges.

Back in 2007, Berry was accused of causing his firm, Scotia Capital, to violate the trading rules on 11 occasions in 2004 and 2005 by soliciting client orders during a distribution period for new issue securities; and, causing violations on 10 occasions by conducting trades that were not printed on marketplace or recognized exchange.

IIROC argued that this trading had the effect of depriving certain clients of the rights that accompany shares purchased under a prospectus; hampered market transparency by not printing trades on the market; and, had the potential to mislead other traders. Scotia admitted liability and entered a settlement agreement back in 2007.

But, according to the panel’s decision, Berry argued that the trading was not in violation of the trading rules because it was conducted before the securities were listed, so they were effectively exempt from those rules. The hearing panel sided with Berry finding that the trading in question was in new, unlisted securities and did not violate the trading rules.

The decision also notes that, while much of the hearing focused on the atmosphere that existed at Scotia near the end of his Berry’s tenure there — where there were issues between the star trader and the firm’s management, mostly involving his compensation, which reached $15 million per year in 2005 when he was dismissed from the firm — this does not affect the outcome of the case.

Reacting to the panel’s decision, IIROC vice president public affairs, Lucy Becker, said, “We are disappointed with the result but respect the panel’s decision.” She added that IIROC is currently reviewing the decision.