The Ontario Securities Commission will not hear an application from the Independent Financial Brokers of Canada concerning by-law changes by the Mutual Fund Dealers Association of Canada, the OSC said Wednesday.

The OSC held a hearing in June to consider an application from the IFBC seeking a review of the commission’s decision to approve changes to the MFDA’s by-laws giving it the power to suspend members and reps without notice in certain circumstances. The IFBC sought an order quashing that decision.

The MFDA and staff of the OSC argued that commission doesn’t have the jurisdiction to hear the IFBC’s application or grant its request to quash the decision, and they said that the IFBC doesn’t have the necessary standing to bring the application. The IFBC disagreed. The hearing panel decided to hear the jurisdictional issue first, and did not hear arguments on the merits of the application.

Today, it released the decision and reasons, siding with its’ staff and the MFDA. The hearing panel notes that the IFB is seeking to quash an administrative act of the commission, not an adjudicative decision. It finds that the commission’s responsibility to supervise self-regulatory organizations, such as the MFDA, “is best carried out by the commission as a whole.”

“We do not believe that it is in the public interest for a hearing panel to review a policy decision made by the commission as a whole,” it says.

And, it finds that the IFB does not have standing to bring the application, as it is not “affected” by the decision to approve the by-law changes. “While there is a possibility that members of the IFB could become subject to proceedings by the MFDA under [the by-law] and thus be affected, the potential alone is not sufficient to bring an application.”

As a result, it concludes that it cannot hear the application brought by the IFB, and it dismisses the application without a hearing on its merits.

“That is not to say however, that a hearing panel of the commission could not hear an application… in which an applicant in the context of specific facts challenges the legality of the by-law,” it adds.

IE