The Ontario Superior Court of Justice refused to add the IDA to an existing action against one of its own members, Thomson Kernaghan and Co. Ltd., and a number of its employees. Christopher Morgis has appealed the decision to the Ontario Court of Appeals.

The appeal will consider whether the IDA, a non statuatory, unincorporated body should owe a duty of care to an investor. The appeal will also explore the legal status and function of the IDA.

Beginning in March 2001, Morgis filed a number of complaints requesting an investigation of Thomson Kernaghan and Co. Ltd., which eventually went bankrupt in July 2002 causing a shortfall of over $18.1 million in investor accounts. Morgis alleges that the IDA was negligent in that they failed to conduct a proper investigation into the allegations of wrongdoings at Thomson Kernaghan and Co. Ltd., notwithstanding his earlier warnings that “both he and the public were at risk from the actions of this Member Firm”.

The IDA maintained it does not owe a duty of care and is not accountable to individual investors. The lower court upheld the IDA’s assertions stating that since individual investors pay nothing to the IDA in the form of dues or fees, that they are not entitled to a duty of care, nor are they entitled to any form of legal accountability from the IDA.

The Ontario Court of Appeal will consider whether the IDA should be held legally accountable to an investor who suffers a loss as a result of alleged negligence. Morgis hopes this appeal will carefully consider the integrity of this self-regulatory organization, and help to restore public confidence in the Canadian capital markets. Morgis intents to exhaust all options to obtain this goal, including recourse to the Supreme Court of Canada if necessary.