An Ontario Securities Commission (OSC) panel has ruled Monday that Crown Hill Capital Corp. (CHCC) and its CEO, Wayne Pushka, violated their fiduciary duty Crown Hill Fund, a fund they managed, by causing it to participate in deals to designed to benefit the manager.

At the heart of the regulator’s allegations were two transactions where the fund management firm caused the closed-end fund to use its assets to facilitate acquisitions for the fund manager, allowing it to boost its fee revenue.

In its decision released Monday, the panel found that CHCC and Pushka acted in their own best interest and not in the best interest of the fund, thereby breaching their fiduciary duty to the fund and violating the public interest.

The panel found that CHCC and Pushka violated their duty to the fund in one deal where the fund loaned the firm 10% of its assets so that it could acquire another fund’s management rights; and, in the other transaction, CHCC caused the fund to use more than 60% of its assets to indirectly acquire management rights to the Citadel Funds. The panel ruled that this deal breached the fund’s investment strategy and created substantial risks to the fund, while only generating “marginal” benefits to its unitholders.

Additionally, the panel found that CHCC acted against the best interests of predecessor funds by amending one fund’s declaration of trust, and changing the rights of the unitholders of another fund, to increase its own powers and management fees; and, that Pushka “misled” CHCC’s independent directors and the members of its independent review committee (IRC), and failed to make full disclosure to them.

The decision indicates that CHCC and Pushka denied the OSC’s allegations and maintained that their decisions were made in good faith and in the best interests of the fund, supported by legal advice, and aimed to comply with securities law. And, they said that the transactions were approved by the firm’s independent directors and its IRC. Moreover, they maintained that there was a solid business rationale for the transactions, and that the OSC shouldn’t be second guessing them after the fact.

The panel clearly sided with OSC staff however, ruling, “Overall, Pushka’s conduct was appalling for a person in a fiduciary relationship with CHF (and its predecessors).”

No sanctions were handed down in decision released Monday; there will be a future hearing to determine any sanctions that might be levied in the case.