Ontario Securities Commission
Ontario Securities Commission
Commission des valeurs mobilières de l’Ontario
22nd Floor 20 Queen Street West Toronto ON M5H 3S8
22e étage 20, rue Queen Ouest Toronto ON M5H 3S8
IN THE MATTER OF THE SECURITIES ACT R.S.P. 1990, c. S.5, AS AMENDED
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IN THE MATTER OF BENNETT ENVIRONMENTAL INC., JOHN BENNETT, RICHARD STERN, ROBERT GRIFFITHS, and ALLAN BULCKAERT
SETTLEMENT HEARING RE: JOHN BENNETT
Hearing: November 29, 2006
Panel: Paul M. Moore, Q.C. Chair
Robert L. Shirriff, Q.C. Commissioner
David L. Knight, Commissioner
Appearances: Pamela Foy Scott Pilkey On behalf of Staff of the Commission
Nigel Campbell On behalf of John Bennett
ORAL RULING AND REASONS
The following text has been prepared for purposes of publication in the Ontario Securities Commission Bulletin and is based on excerpts of the transcript of the hearing. The excerpts have been edited and supplemented and the text has been approved by the chair of the panel for the purpose of providing a public record of the decision.
Chair:
1The panel has considered the settlement agreement between staff of the Ontario Securities Commission and John Bennett. We have listened to submissions of counsel for staff and for Mr. Bennett. We have decided that the settlement agreement should be approved as being in the public interest.
2This is the third settlement arising out of the matter. I refer to two previous settlements, approved at hearings held on June 20, 2006. They are reported in the Ontario Securities Commission bulletin at 2006-29-OSC-B-5725 and -5727. One was an agreement between staff of the Commission and Bennett Environmental Inc. The other was between staff of the Commission and Allan Bulckaert. The reasons given in those settlement hearings are relevant to our approval of this settlement agreement.
3I'm not going to go into all of the facts in the present settlement agreement because the facts are set out in the settlement agreement. It will be an exhibit in the bulletin.
4Briefly, the matter involved a contract entered into by Bennett Environmental, where all of the facts relating to that contract were not clearly disclosed. There were some subsequent disclosures of a dispute concerning the contract that caused the market price of the company's shares to drop almost 50 per cent within ten days after the disclosure.
5At all relevant times, Mr. Bennett was chair of the board of the company and chief executive officer until February 18, 2004.
6He is 71 years of age. He was the founder of the company and one of the two members of its disclosure committee which was responsible for the company's disclosure obligations.
7As chairman of the board and chief executive officer of the company, he was generally aware of the contract dispute that was material to this matter.
8It was Mr. Bennett's position that none of the events that occurred at the material time shook his confidence in the validity of the contract, and he mistakenly believed that the contract dispute would be resolved in favour of the company.
9But for our purposes, it's important that he does admit that the existence of the dispute over the contract constituted a material change within the meaning of the Act, and that the company failed to disclose forthwith the material change, contrary to section 75 of the Act and contrary to the public interest.
10Mr. Bennett acknowledges that by failing to act on the information available to him, he, in effect, authorized, permitted, or acquiesced in the company's failure to disclose the material change forthwith and thereby committed an offence, contract to section 122(3) of the Act, and acted contrary to the public interest.
11He also admits that the company's continued reporting of certain matters in relation to the contract was misleading or untrue, pursuant to section 122(1)(b) of the Act, and contrary to the public interest.
12He acknowledges that by failing to act on the information available to him, he authorized, permitted, or acquiesced in the misleading or untrue disclosure regarding the contract, and thereby committed an offence, pursuant to section 122(3) of the Act, and acted contrary to the public interest.
13There are mitigating factors. These are set out in Part 4 of the settlement agreement.
14By way of settlement, Mr. Bennett has agreed that he will be prohibited from acting as a director or officer of any issuer for a period of ten years, that he shall be reprimanded for his conduct, and that he will voluntarily pay to the Commission a significant administrative penalty in the amount of $250,000, plus $50,000 towards the cost of the investigation of the matters surrounding this issue.
15Staff submitted, and Mr. Bennett concurs, that the ten-year prohibition against Mr. Bennett is appropriate on the basis of his age, and the unlikelihood of Mr. Bennett returning to the capital markets in the capacity of a director or officer beyond the ten-year term. In effect, this is equivalent to a lifetime prohibition and, under all the circumstances, is proportionately appropriate.
16The role of a Commission panel reviewing a settlement agreement is not to substitute the sanctions it would impose in a contested hearing for what is proposed in the settlement agreement, but rather to make sure the agreed sanctions are within acceptable parameters.
17Our jurisdiction is not to punish. The Supreme Court of Canada in the Committee for Equal Treatment of Asbestos Minority Shareholders v. Ontario Securities Commission (2001 SCC 37, [2001] 2 S.C.R. 132) made it quite clear that our jurisdiction is to prevent future harm to the public by removing, restricting, or sanctioning people who trade in the capital markets and registrants who abuse the market by acting contrary to the public interest.
18We have to be proportionate. The deterrent value of any decision is that persons in a like situation understand the consequences to them of any violation of the Act.
19We have considered the submissions of staff and of counsel for Mr. Bennett with reference to these matters, and we have come to the following conclusions.
20First, the failure to disclose material information in a timely way is a serious matter.
21Mr. Bennett was