The Ontario Securities Commission has denied former investment banker Andrew Rankin’s bid to have his settlement agreement with the OSC withdrawn.
The OSC released a decision Tuesday that represents the latest chapter in the long-running Rankin saga. Rankin sought to have the settlement he reached with the OSC back in 2008 revoked. That settlement had seemingly concluded a case that first saw him convicted of 10 counts of illegal insider tipping on allegations that he tipped a childhood friend, Daniel Duic, to pending mergers and acquisitions when he worked as an investment banker at RBC. That initial conviction was set aside and ordered back to trial, but before a second trial could commence Rankin settled with the OSC, agreeing to an administrative penalty and the withdrawal of the quasi-criminal charges he faced.
Last September though, Rankin applied to the OSC to have the settlement tossed out on the grounds that OSC staff failed to disclose to him, before he reached his settlement, that Duic was the subject of an OSC investigation into an alleged breach of a cease trade order.
According to the decision released Tuesday, Rankin maintained that OSC staff owed him a duty to disclose the fruits of their investigation regarding the alleged breach by Duic, and that staff knew that full disclosure of the Duic investigation to him would have been very prejudicial to the outcome of settlement negotiations with him. Rankin claimed that if he’d known about the investigation he never would have agreed to the settlement, and would have contested the allegations against him, because it would have fatally undermined Duic’s credibility as a witness against him.
OSC staff opposed the application, conceding that it did have an obligation to disclose the existence of the Duic investigation to Rankin, but that it fulfilled that obligation by orally informing Rankin’s legal counsel at the time.
The OSC hearing panel denied Rankin’s bid, ruling that when he agreed to the settlement, Rankin was represented by experienced legal counsel. He had received extensive disclosure, and had already been through one criminal trial during which his counsel vigorously contested the OSC’s case and Duic’s credibility. “By any measure, Rankin had a full appreciation of the nature of the allegations against him, the strengths and weaknesses of the case and the nature and quality of the evidence,” it says.
The panel also finds that the oral disclosure to Rankin’s counsel of the Duic investigation “was sufficient disclosure” of that investigation. “While it would have been preferable for staff to have communicated that information to Rankin’s counsel in writing, it was not obligated to do so. Once that communication was made, it was up to Rankin’s counsel to make further enquiry if he considered that relevant or appropriate in the circumstances,” the decision says.
The panel also addresses the question of whether the result is manifestly unfair to Rankin, and finds that it is not. It says that his claim that he was deprived of ‘crucial information’ relating to Duic’s credibility as a witness “is greatly exaggerated”.
It notes that the trading by Duic constituted an unintentional breach of a cease trade order. “That is hardly crucial information going fundamentally to Duic’s credibility as a witness against Rankin,” it says.
The panel finds the fact that Duic unintentionally breached a CTO would not “have had any significant effect on a commission panel in assessing Duic’s credibility.” And it notes that it was clearly a significant benefit to Rankin to settle the criminal charges against him by agreeing only to administrative sanctions and avoiding the possibility of criminal penalties.
Furthermore, the panel notes that if it grants Rankin’s application, this would lead to a perverse outcome because the limitation period on his case would have expired, meaning it couldn’t bring fresh charges against him. “Accordingly, in our view, dismissing the application in these circumstances is not manifestly unfair to Rankin,” it finds.
The panel concludes that Rankin has not established sufficient grounds for the OSC to revoke the settlement agreement. “In our opinion, to order a revocation of the Rankin settlement agreement in these circumstances would be prejudicial to the public interest,” it says.