The Ontario Securities Commission levied fines against two brokerage firms Wednesday in its long awaited decision on YBM Magnex International Inc.

The OSC ordered that YBM cease trading permanently, and that its executives, Jacob Bogatin and Igor Fisherman , be permanently prohibited from becoming or acting as a director or officer of any issuer.

Investment banker and YBM director, Owen Mitchell, receives a five-year ban from acting as a director or officer and must pay investigation and hearing costs of $250,000. Directors Kenneth Davies and Harry Antes each receive three-year director bans and were ordered to pay costs of $75,000.

While the OSC said the penalized directors were worthy of sanction, it found that former premier of Ontario, David Peterson, met his obligations. “We believe Peterson could have done more, we have concluded that Peterson acted reasonably based on his involvement in the matter, his skill and his access to information in the circumstances. Accordingly, his due diligence defence is available to him, but just barely.”

The firm’s underwriters, National Bank Financial Corp. must pay investigation and hearings costs of $400,000. Brokerage firm Griffiths McBurney & Partners also faces the same costs and it must submit to a review of its practices and procedures as an underwriter by an independent person approved by OSC staff and institute any changes recommended by that person.

In a summary of the ruling handed down by a panel consisting of former OSC vice chair, Howard Wetston, and commissioners Derek Brown and Robert Davis, the OSC found that, “YBM’s key disclosure documents did not, we find, contain full, true and plain disclosure of all material facts.”

The commission says that, despite a hearing which took over 124 hearing days to complete, “this case is not about organized crime, money laundering or whether the respondents believed YBM was not a real company. It is about the disclosure of risk. Materiality is reinforced as the standard for such disclosure in securities markets by taking into account the considerations associated with the exercise of judgement and reasonable diligence.”

It said that YBM’s disclosure “leads the reader to believe that the risks faced by YBM were no greater than the inherent risks faced by any company operating in Eastern Europe at that time,” but the OSC finds this to be incorrect. “YBM was subject to company-specific risks. An investor in YBM’s securities had the right to know what specific risks were presently threatening the issuer.”