Only the Ontario Securities Commission (OSC) can revoke its own investigation orders, Ontario’s Capital Markets Tribunal has ruled.
In response to an application from crypto platform Binance Holdings Ltd. asking the tribunal to revoke an OSC order that authorized an investigation into the firm’s conduct, the tribunal ruled it didn’t have jurisdiction to make that decision and that only the OSC, through its executive function, has the capacity to kill an investigation order.
In its reasons for that decision, the tribunal noted that the central question was whether it has the jurisdiction to revoke an investigation order in the wake of reforms adopted in 2022 that formally separated the adjudicative function from the OSC, creating the tribunal as a separate body.
While there were provisions in securities legislation that existed before the 2022 reforms that allowed the old “commission” to revoke a decision of the “commission,” the new regime specifies that the tribunal can only revoke (or vary) decisions of the tribunal.
In its analysis of whether the legislature intended to give the tribunal the power to revoke an investigation order issued by the OSC, the tribunal concluded that this would lead to absurd results, such as giving the tribunal oversight of the regulator’s investigations, “which would radically undermine rather than reinforce the separation of the investigation and adjudication functions.”
More clearly separating those functions was one of the key goals of the move to overhaul the OSC’s structure.
The tribunal also rejected Binance’s argument that the legislature intended to give the tribunal greater oversight of the commission, saying “such a supervisory role over investigations would compromise rather than strengthen the tribunal’s independence.”
“The commission’s investigations are a regulatory function that should be clearly separated from, not supervised by, the tribunal,” it said.
Ultimately, the tribunal concluded that efforts to revoke an investigation order can be handled only by the OSC, or by the courts.
“We understand the argument that there may be practical challenges associated with both of these options, but even if we were to so find, we could not rely on such a finding to clothe the tribunal with jurisdiction it does not have,” it concluded. “The tribunal is a creature of statute with no inherent jurisdiction. It can exercise only those powers the legislature gives it, even if that leaves parties with options they consider less than ideal.”
After finding that it doesn’t have the jurisdiction to revoke an investigation order, the tribunal ruled that it also doesn’t have the jurisdiction to consider Binance’s request to quash a summons.