After reaching a settlement with one founder of failed hedge fund firm Portus Alternative Asset Management Inc., the Ontario Securities Commission (OSC) is preparing to hold a hearing to sanction Portus’ other founder, Michael Mendelson.

On Aug. 27, the OSC settled with Portus co-founder Boaz Manor, banning him from the industry and ordering him to pay $8.8 million in disgorgement. It also settled with the former Portus compliance officers, leaving just Mendelson and Portus facing regulatory allegations.

Following the settlement, the OSC was slated to go ahead with a hearing into allegations against Portus itself and Mendelson in September and October. However, in an order issued on Wednesday, the regulator indicated that it has agreed to skip a planned hearing in the Portus saga, and will proceed straight to a sanctions hearing with Mendelson on Oct. 2.

The OSC said that Mendelson appeared before the commission via teleconference on Sept. 4, and made submissions, along with OSC staff, indicating that they have agreed on the facts against him in the case. They also agreed to vacate the planned merits hearing and proceed straight to a sanctions hearing.

The OSC first brought allegations against Portus, Manor, Mendelson and the firm’s compliance officers back in 2005. The case was adjourned while Manor and Mendelson also faced criminal proceedings in the case.

In 2007, Mendelson was convicted on one charge and was sentenced to two years in jail and three years on probation. He served his time and was released. Last year, Manor pled guilty to two counts and was sentenced to four years in jail. He is now on day parole.

The original allegations included charges that the firm carried out an illegal distribution, traded without registration, misrepresented the nature of its investments and the fees associated with those investments, along with disclosure and supervisory failings.

In terms of Portus itself, which is in receivership, the OSC indicates that the allegations pending against it will be dealt with separately at a future date. It did not set a date for that proceeding.