A Market Regulation Services Inc. hearing panel has thrown out charges against a pair of traders, ruling that RS exceeded its jurisdiction in bringing allegations against them.

The panel, chaired by the Hon. Hilda McKinlay, ruled that disciplinary charges against Louis Anthony DeJong and Dwayne Barrington Nash should be tossed out, finding that “RS has exceeded its jurisdiction under the [universal market integrity] rules as they existed at the time of the acts alleged in these proceedings, and that, as a result, the proceedings against DeJong and Nash should be, and are hereby dismissed.”

DeJong and Nash were caught up in allegations RS brought against Credit Suisse First Boston Canada Inc. where Nash is the head trader and DeJong is the head of Canadian Equities. RS issued allegations against CSFB and the two traders last September alleging that they violated market rules by improperly trading BCE stock off the market.

The panel didn’t consider the merit of the charges, instead it considered whether RS had jurisdiction to discipline the pair. They argued that the allegation brought against them applied only to the firm, and not to them as individuals, and the panel agreed.

“We have no doubt that it is important in the public interest that employees be aware of the rules and abide by them, and we also would have expected that the UMI Rules would provide for disciplining of employees. The question before us is whether the rules did so provide at the time of the alleged contravention of in this case,” the panel said.

“There is no indication in any of the information provided by RS about proceedings against individuals that the issue was ever raised as to whether employees could properly be disciplined. It seems to have been merely assumed, without argument, that they could,” it noted. In this case, however, it found that RS was overstepping its reach.