CITATION: Eley v. Ontario Securities Commission, 2023 ONSC 2168
DIVISIONAL COURT FILE NO.: 215/21 DATE: 20230406
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
Edwards R.S.J., D.L. Corbett and O’Brien JJ.
BETWEEN:
DOUGLAS JOHN ELEY
Jay Naster and Alyssa Jagt, for Mr Eley
Appellant
– and –
ONTARIO SECURITIES COMMISSION
Erin Hoult, for the OSC
and INVESTMENT INDUSTRY REGULATORY ORGANIZATION OF CANADA
Robert del Frate, for the IIROC
Respondents
HEARD at Toronto (by videoconference): June 13, 2022
REASONS FOR DECISION
D.L. Corbett J.
[1] This is an appeal from the decision of the respondent Ontario Securities Commission[^1] (“OSC”) (2021 ONSEC 19) dismissing a review of two decisions of the respondent Investment Industry Regulatory Organization of Canada (“IIROC”): the “Merits Decision” dated January 28, 2020 [2019 IIROC 35] and the “Sanctions Decision” dated October 6, 2020 [2020 IIROC 35]. IIROC found that the Appellant (“Eley”) engaged in conduct and practices unbecoming a member of IIROC and detrimental to the public interest and it imposed various sanctions. IIROC found Eley liable for improper alterations to client documents made after those documents had been signed by the clients. This was Eley’s second offence for this kind of conduct.
Summary
[2] This case turns on findings of fact. Those findings – that Eley altered, directed the alteration of, or was willfully blind as to the alteration of, client documents after they had been signed by the clients – are reasonable and are rooted in the record below. The OSC’s findings to this effect are reasonable. The conclusions drawn from these findings by both IIROC and the OSC – that Eley engaged in conduct unbecoming a member of IIROC and detrimental to the public interest – are likewise reasonable. While there were some fact-finding imperfections at the IIROC, the OSC concluded that these imperfections did not render the IIROC proceedings unfair or undermine the reasonableness of IIROC’s core factual findings grounding liability. This conclusion of the OSC Panel is reasonable. The sanctions imposed disclose no error in principle and are likewise reasonable. Therefore, for the reasons that follow, the appeal is dismissed.
Background
(a) The IIROC Decisions
[3] On November 22, 2018, IIROC issued a Notice of Hearing and Statement of Allegations alleging that the Appellant: “[b]etween May 2015 and November 2015… altered previously signed client documents, contrary to Dealer Member Rule 29.1.” Evidence presented at the hearing showed alterations to various client documents, including “Managed Account Agreements”, “Switch Tickets” and “Dealer Rep. Change Forms.” The alterations established on the evidence at the hearing included:
a. Managed Account Agreements:
i. Changes or additions to the advisor name / advisor code and signature dates;
ii. Changes to account objectives and amount risk tolerances;
iii. Deletion of a joint account holder name and change of date beside the remaining account holder name; and
iv. Additions of management fee.
b. Switch Tickets:
i. Photocopied mutual fund switch tickets for clients with altered trade instructions; and
ii. Previously signed mutual fund switch tickets altered to add or amend trade instructions.
c. Dealer Rep Change Forms:
i. Multiple instances in which the Appellant’s code and email address replaced previous Reps’ codes and addresses.
ii. Some instances where the changes described in (i) were made more than once on the same form
[4] Altered Managed Account Agreements were sent to the Appellant’s dealer and thence to the dealer’s carrying broker, enabling the managed accounts to be opened. Altered Switch Tickets were, in some cases, sent to third party mutual fund companies. Altered Dealer Rep Change Forms were sent to third party fund companies.
[5] The Appellant acknowledged altering Managed Account Agreements and Switch Tickets, and he acknowledged that his handwriting appeared on various of the altered documents. He denied making other changes.
[6] Evidence at the IIROC Merits Hearing included multiple versions of the altered documents, such as unsigned copies sent to clients, signed versions returned by clients, and altered versions after the clients had signed the documents. In most cases, the Appellant had sent or received each of the multiple versions of the documents.
[7] The IIROC Hearing Panel found:
Despite the [Appellant’s] denials, there is compelling circumstantial evidence indicating that it would have been difficult for Mr. Eley not to have been aware of the changes. His testimony at the hearing was that he was unaware that the changes had been made and did not know how the changes were made or who could have made them. The documents speak for themselves; the identically formed and placed signatures on multiple documents and clear obliterations are clearly visible despite the fact that they were electronic copies and not originals. The alterations on documents presented to the Panel were clearly apparent to the three panelists who examined them and compared them at the hearing. In some cases, multiple versions of the same document, with identical signatures, had been used. (IIROC Merits Decision, para. 67)
[8] Taking all the evidence into account, the IIROC Hearing Panel concluded;
The evidence before the Panel leads to the inescapable conclusion that either Mr. Eley made the changes, that he instructed others to make the changes, or that others made them with his knowledge. At the very least, he turned a blind eye with implicit approval. Once he was registered, he allowed the altered documents to stay in the client files that he took over…. (IIROC Merits Decision, para. 77)
The IIROC Hearing Panel concluded that this was “conduct unbecoming” contrary to Dealer Member Rule 29.1, as alleged.
[9] A Sanctions Hearing was held September 14, 2020, and the IIROC Sanctions Decision was released October 6, 2020. The IIROC Panel ordered the following sanctions (IIROC Sanctions Decision, para. 48):
a. Suspension of the Appellant’s registration for 12 months, during which the Appellant be precluded from employment in any capacity with an IIROC Dealer;
b. Requirement that the Appellant be under “close supervision” for eighteen months after his suspension expires;
c. Payment of a fine of $50,000; and
d. Payment of costs of $50,000.
[10] This was Eley’s second offence. It happened shortly after the period of close supervision ended for Eley’s first offence. IIROC staff sought a permanent ban. In the Sanctions Decision, the IIROC Panel found that “the nature of the misconduct in this case, although egregious, is not of itself deserving of the permanent bar requested by IIROC Staff.” The IIROC Panel held that the sanctions imposed “must be heavy enough to have the necessary deterrent effect to deter both Eley and others working in the public markets” (IIROC Sanctions Decision, para. 43).
(b) OSC Decision
[11] The Appellant sought review of both the IIROC Merits and Sanctions Decisions. The OSC dismissed the review application on March 5, 2021 and issued its reasons for this decision on August 20, 2021. The OSC summarized its findings as follows:
In our view, the IIROC Panel neither erred in law nor proceeded on an incorrect principle, nor misapprehended or otherwise overlooked material evidence. The IIROC Panel applied the appropriate onus of proof…, properly considered all material evidence and excluded irrelevant evidence. The IIROC Panel appropriately relied on direct evidence of Eley making certain alterations to previously signed client documents as well as circumstantial evidence of other alterations in determining that Eley was responsible for the improper alterations to client documents.
The IIROC Panel’s approach to determining sanctions appropriately considered the relevant factors and circumstances and was consistent with applicable principles, guidelines and prior decisions. (OSC Decision, paras. 8-9)
Jurisdiction and Standard of Review
(a) The Appeal in this Court
[12] The Securities Act, RSO 1990, c. S.5, s.10(1), provides for an appeal to the Divisional Court for persons affected by a final order of the OSC.[^2] An “appellate standard” of review applies to the appeal to this court: Quadrexx Hedge Capital Management Ltd. v. OSC, 2020 ONSC 4392, paras. 74-81 (Div. Ct.), applying Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65. That is, to quote from Quadrexx (at paras. 77-81 [authorities other than Baker omitted]):
[77] Where a ground of appeal raises an issue of law alone, the standard of review is correctness.
[78] Where the ground of appeal raises a question of fact, the appellate court must pay substantial deference to it…. Before it may properly interfere, the appellate court must conclude that the submitted error amounts to a "palpable and overriding error". The word "palpable" means "clear to the mind or plain to see", and "overriding" means "determinative" in the sense that the error "affected the result". The Supreme Court has held that other formulations capture the same meaning as "palpable error": "clearly wrong""unreasonable" or "unsupported by the evidence".
[79] Examples of palpable error include (a) findings made in the complete absence of evidence (this could also amount to an error in law); (b) findings made in conflict with accepted evidence; (c) findings based on a misapprehension of the evidence; (d) findings of fact, drawn from primary facts, that are a result of speculation rather than inference; and (e) findings of fact based on evidence that has no evidentiary value because it has been rejected by the trier of fact.
[80] Matters of mixed fact and law lie along a spectrum; where the error of the decision-maker can be traced to a clear error in principle, it may be characterized as an error of law and subjected to a standard of correctness; where the legal principle is not readily extricable, then the matter is subject to standard of palpable and overriding error.
[81] The standard of review for issues of procedural fairness is sometimes stated to be "correctness". It is also characterized as a review as to "whether the rules of procedural fairness or the duty of fairness have been adhered to". These formulations of the standard of review are generally taken to mean the same thing: there is discretion and flexibility respecting process before administrative tribunals, and so it cannot be said there is always a single "correct" view of the procedures to be followed. However, administrative discretion must be exercised in a way that is procedurally fair. In assessing procedural fairness in a particular case, the court uses the factors set out in Baker v. Canada (Minister of Citizenship and Immigration), 1999 699 (SCC), [1999] 2 SCR 817.
(b) The Review at the OSC
[13] The Securities Act and its related regulations, rules and policies, are a comprehensive scheme for regulation of the securities markets in Ontario, including regulation of professions engaged in business in those markets. The purposes of the Act include (s. 1.1):
a. to provide protection to investors from unfair, improper or fraudulent practices;
b. to foster fair, efficient and competitive capital markets and confidence in capital markets;
b.1. to foster capital formation; and
c. to contribute to stability of the financial system and reduction of systemic risks.
[14] The Act provides (at s. 2.1(4)) that (among principles to which the OSC is to have regard):
[t]he [OSC] should, subject to an appropriate system of supervision, use the enforcement capability and regulatory expertise of recognized self-regulatory organizations.
[15] A self-regulatory organization recognized by the OSC (“SRO”) is required to:
regulate the operations and the standards of practice and business conduct of its members and their representatives in accordance with its by-laws, rules, regulations, policies, procedures, interpretations and practices (Act, s. 21.1(3)).
[16] IIROC was recognized as an SRO by an OSC Recognition Order, which contains compliance terms and conditions, including a requirement that IIROC establish rules designed to “ensure compliance with securities laws”, “foster fair, equitable and ethical business standards and practices” and “promote the protection of investors” (2021) OSCB 2557).
[17] A person affected by a decision of an SRO (including IIROC) may apply to the OSC for a “hearing and review” (Act, ss. 8(3) and 21.7). The OSC may confirm the decision of the SRO or make such other decision as the OSC considers proper.
[18] A “hearing and review” is broader than an appeal, but the OSC takes a “restrained approach” – applicants must meet a “high threshold” to show that an SRO decision ought to be overturned: Northern Securities Inc. (Re), 2013 ONSEC 48, paras. 48-49, 54, 56-57.
[19] On a hearing and review before it, the OSC only interferes with an SRO decision on one or more of the following grounds (Canada Malting Co. (Re) (1986), 9 OSCB 3565, para. 24; Locke v. IIROC, 2022 NSCA 31, paras. 13-20):
(a) the SRO has proceeded on an incorrect principle;
(b) the SRO has erred in law;
(c) the SRO has overlooked material evidence;
(d) new and compelling evidence is presented to the Tribunal that was not presented to the SRO;
(e) the SRO’s perception of the public interest conflicts with that of the OSC.
[20] As noted by the Nova Scotia Court of Appeal in Locke (at para. 15), the “presumption of a reasonableness review arises whether the reviewing body is a court or an administrative tribunal” (citing Bryun v. Alberta Dental Association and College, 2021 ABCA 272, para 22). The Nova Scotia Court of Appeal went on to conclude that the standard of review below, in the context of securities matters, “is expressed through the Canada Malting test” (para. 20). I agree.
[21] In this court, the appellate review of the OSC decision is based on a standard of correctness in respect to the standard of review applied by the OSC: did the OSC correctly state and apply the standard of review. Factual findings of the OSC are reviewed in this court on a standard of palpable and overriding error.
[22] It bears emphasizing that the focus of appeal in this court is the OSC Decision and not the underlying IIROC decisions.
Issues on Appeal
[23] Eley raises the following grounds of appeal (Appellant’s Factum, para. 3):
(i) The OSC erred in concluding that the IIROC panel did not deny the Appellant procedural fairness and/or commit an error of law or principle by reversing the burden of proof and requiring the Appellant to prove his innocence;
(ii) The OSC erred in concluding that the IIROC Panel did not commit an error of law in relying on its rejection of the Appellant’s evidence as affirmative evidence of guilt in the absence of any finding of deliberate fabrication;
(iii) The OSC erred in concluding that the IIROC Panel did not commit an error of law in rejecting the Appellant’s evidence by drawing an impermissible inference from purported circumstantial evidence which, as a matter of law, did not constitute “circumstantial evidence” from which any permissible inference could be drawn;
(iv) The OSC erred in concluding that the IIROC Panel did not deny the Appellant procedural fairness by relying on conduct that was not alleged in the Statement of Allegations, relying on conduct that was outside the relevant period in the Statement of Allegations, and permitting IIROC to adopt a shifting theory of liability;
(v) The OSC erred in concluding that the IIROC Panel did not err in law in concluding there was a “pattern” of misconduct sufficient to constitute conduct unbecoming, and in sanctioning the Appellant, by relying on conduct found by the IIROC Panel to be innocuous and acceptable industry practice.[^3]
Issue (i) Did the OSC err in permitting reversal of the burden of proof ?
[24] The burden of proof lay on IIROC, on a balance of probabilities: F.H. v. McDougall, 3 SCR 41. Where, as in this case, there is “clear and cogent evidence” that client documents have been altered after they were signed, direct evidence that the Appellant was responsible for some of this misconduct, and circumstantial evidence implicating him in the balance of the alleged conduct, it is permissible for the tribunal to ask itself if the Appellant’s account of events, and the evidence he has tendered in support of that account, is sufficient to persuade the tribunal that it has not been established that he probably did what has been alleged (see: Law Society of Upper Canada v. Marler, 2010 ONSLAP 29, paras. 22-25; Fiorillo v. Ontario Securities Commission, 2016 ONSC 6559, paras. 159-161, 178-179, 193-194 and 200-203).
[25] The OSC panel found that “[c]ertain portions of the [IIROC] Merits Decision read in isolation risk creating the impression that the IIROC Panel misapprehended the onus” and that the IIROC Panel could have expressed itself better which, had that been done, “may have assisted the reader and removed any confusion” (OSC Decision, para. 80). The OSC concluded, on this point:
… the Merits Decision must be read as a whole with these portions in context and without unduly parsing phrases or sentences. When this is done, it is clear that such statements form part of the IIROC Panel’s considerations and basis for its rejection of both Eley’s denial of the remaining allegations and his suggestion that others were capable and motivated to make the alterations. The lack of any direct evidence (testimony of witnesses other than Eley or documents) demonstrating that someone else made the changes or was motivated to make the changes was one of many factors considered by the IIROC Panel (OSC Decision, para. 81).
[26] The OSC Panel made no error in reviewing the IIROC Panel’s reasons in this fashion. Review of an administrative decision is not a “line-by-line treasure hunt for error” (Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, para. 102), but rather, a fair and contextual reading of the reasons as a whole. It is evident that the IIROC Panel was satisfied on a balance of probabilities by the prosecution’s case, found that Eley’s evidence did not change their assessment of the evidence, and that the IIROC Panel gave satisfactory reasons for its credibility assessment of Eley’s evidence. The OSC Panel applied the correct test in reviewing the IIROC Panel’s reasons, and its conclusion that the IIROC Panel did not reverse the onus of proof discloses no error in principle or palpable and overriding error of fact. This ground of appeal fails.
Issue (ii) Did the OSC err in permitting rejection of Eley’s evidence to be used as affirmative evidence of guilt ?
[27] Eley testified before IIROC and provided a version of events which, he argued, provided an explanation inconsistent with guilt. The IIROC did not accept Eley’s evidence. As it was required to do in these circumstances, IIROC explained why it disbelieved Eley’s evidence (Merits Decision, paras. 66-68): see Fiorillo v. Ontario Securities Commission, 2016 ONSC 6558 (Div. Ct.), paras. 159-161, per Marrocco A.C.J.S.C.
[28] Where “a respondent presents an alternative explanation that is as likely as the explanation asserted by Staff, then Staff will not have met its burden” (Hutchinson (Re), 2019 ONSEC 36, para. 57). Where a respondent presents an alternative explanation that is not as likely as the explanation asserted by Staff, then the tribunal is required to explain this conclusion. One explanation could be that the tribunal does not accept the respondent’s evidence. This conclusion – resting on a finding of credibility, requires some explanation in the reasons. In this regard, the IIROC Panel set out the proper test (Merits Decision, para. 69, citing Faryna v. Chorney, [1952] DLR 354 (BCCA):
The test must reasonably subject his story to an examination of its consistency with the probabilities that surround the currently existing conditions. In short, the real test of the truth of the story of a witness in such a case must be its harmony with the preponderance of the evidence which a practical and informed person would readily recognize as reasonable in that place and in those conditions.
[29] The IIROC Panel concluded that Eley’s explanation was not as likely as the explanation offered by Staff. In so concluding, it did not use its rejection of Eley’s evidence as affirmative evidence of guilt. The OSC, considering the Merits Decision “read in its entirety”, so concluded, and this conclusion discloses no error in principle or palpable and overriding error of fact. I would not give effect to this ground of appeal.
Issue (iii) Did the OSC err in permitting IIROC to draw impermissible inferences ?
[30] Eley’s argument on this point mischaracterizes the basis on which inferences may be drawn. The trier of fact is entitled to draw an inference from all the evidence that the trier of fact accepts – be that evidence direct or circumstantial. On review, the question is whether there was a sufficient basis in the evidence to draw the inference in question. The test, on review, is whether an inference is “reasonably and logically drawn from a fact or group of facts established by the evidence” (Finkelstein v. Ontario 2016 ONSC 7508, paras. 17-20 (Div. Ct.); rev’d in part on other grounds: 2018 ONCA 61).
[31] Drawing inferences is an aspect of fact-finding. Considerable deference is accorded to findings of fact, including inferences drawn from the evidence: Housen v. Nikolaisen, 2002 SCC 33, paras. 23-25. Where an inference is “reasonably and logically drawn” they will not be “overturned by a reviewing or appellate court just because there are other inferences that could have been drawn, even if those other inferences might be said to be more persuasive” (Finkelstein v. Ontario 2016 ONSC 7508, paras. 17-24 (Div. Ct.); rev’d in part on other grounds: 2018 ONCA 61).
[32] Evidence does not fall into sealed compartments called “direct” and “circumstantial”. The characterization of evidence as “direct” or “circumstantial” arises from the relationship between that evidence and the factual finding for which it is tendered. Thus, for example, the client documents, themselves, are some direct evidence of unauthorized alterations having been made to those documents after they were signed by clients. The client documents are also some circumstantial evidence supporting an inference that Eley altered or authorized and directed alteration of the documents.
[33] In its factum, IIROC goes into some detail describing the factual matrix within which the inference was drawn that Eley was liable for alteration to signed client documents (IIROC Factum, paras. 62-73). With respect, this was a strong prima facie case. There was a compelling pattern of unauthorized document alteration in Eley’s client files, apparent on the face of the documents, which passed through Eley’s hands and was relied on by Eley in his dealings. In the face of this case, the only evidence impeding an inference that Eley was responsible was Eley’s evidence. It was unparticularized, uncorroborated, and failed to explain circumstances – for which there were direct evidence – where it was not credible for Eley to claim that he was unaware documents had been altered. The OSC concluded:
… there was ample direct and circumstantial evidence from which the IIROC Panel was entitled to draw the inference that Eley was involved in the improper alteration to client documents despite his denial. In all the circumstances, this was a reasonable conclusion.
This conclusion discloses no error in principle and no palpable and overriding error of fact. I would not give effect to this ground of appeal.
Issue (iv) Did the OSC err in permitting IIROC to rely on conduct not alleged in the Statement of Allegations and a “shifting theory of liability” ?
[34] The OSC addressed this issue at paras. 49-65 of its Decision. It concluded that the Statement of Allegations was framed generally enough to encompass “client documents” generally, and that the failure to particularize every type of “client document” was not procedurally unfair. In so concluding, the OSC noted that all documents said to have been altered were produced to Eley in advance of the hearing, and that Eley had a fair chance to respond to all the evidence tendered against him.
[35] The OSC found that the IIROC Panel had made some errors in identifying altered documents upon which it could, and could not, make findings against Eley (at Decision, paras. 61-63), but concluded as follows in respect to these errors:
These errors by the IIROC Panel had no impact on its ultimate finding that Eley was responsible for alterations of previously signed client documents in contravention of Dealer Member Rule 29.1. These errors may only have resulted in findings of additional instances of improper alterations to support imposing more onerous sanctions…. (Decision, para. 64)
[36] Put another way, the OSC found that the IIROC did make some errors making findings against Eley that were not encompassed by the SOA, but that these errors did not affect the core finding of the Merits Hearing. These erroneous findings could have led the IIROC to have imposed a more onerous sanction than it did, but that is not an issue in light of the sanctions that were imposed.
[37] The OSC’s finding that the SOA was framed broadly enough to encompass unenumerated altered “client documents” discloses no error in principle and resulted in no unfairness to Eley. It is firmly rooted in the record and procedural history of the case. The errors made by the IIROC Panel (particularly in respect to documents outside the time-period alleged in the SOA) did not affect the Merits Decision and do not render the Sanctions Decision unreasonable, and, in the result, the OSC’s conclusion that these errors worked no unfairness to Eley discloses no error in principle and no palpable and overriding error of fact. I would not give effect to this ground of appeal.
Issue (v) Did the OSC err in permitting IIROC to rely on conduct found to be “innocuous” and “acceptable industry practice” to ground liability ?
[38] Eley’s argument on this point is based on the use made by the IIROC Panel of an “Evidence Chart” prepared at the Panel’s request as an aid to argument. The chart included alterations which the Panel found to be “innocuous” and “acceptable industry practice.” However, the Panel relied upon the totals set out in the chart (which included these “innocuous” and “acceptable” alterations) as one finding supporting its conclusion that there was a “pattern” of conduct, a finding upon which it based its findings on both liability and sanctions.
[39] As I note above in para 33, there was a compelling pattern of unauthorized alterations to client documents in Eley’s client files. The overstatement of the proportion of such client files for which Eley was responsible does not undercut the conclusion that the evidence showed a pattern of misconduct. The IIROC Panel heard and considered the evidence respecting these unauthorized alterations, and was aware of the multiplicity of incidents of misconduct: this is not a case where a summary has been prepared and evidence heard only in respect to a representative sample reflected in the summary: the Panel heard and read all the evidence respecting authorizations, expressly found some to be “innocuous” and “acceptable”, and based its conclusion that there was a “pattern” of misconduct on the instances that grounded liability. I would not give effect to this ground of appeal.
Sanctions
[40] Eley did not raise an issue on appeal respecting the sanctions. However, in his argument on liability issues, he did argue that the IIROC Panel erred in finding a “pattern” of misconduct and relied upon this error in its Sanctions Decision. I have rejected this argument as it relates to the liability findings against Eley; I also do not see it as a basis for interfering with the sanctions imposed.
[41] Eley was not a first-time offender. In 2014, an IIROC panel imposed a 6-month suspension, a one-year period of strict supervision, and a fine of $50,000 upon finding that Eley had “falsely endorsed the signatures of several clients on certain client account documentation and other forms…” (Eley (Re), 2014 IIROC 52, para. 2). In particular, Eley used pre-signed blank New Client Applications, re-used Switch Tickets from previous years, endorsed client signatures on account documentation, and intentionally and successfully concealed this conduct from his dealer (Eley (Re), 2014 IIROC 52, para. 11).
[42] In the 2014 decision, the IIROC panel stated as follows:
The proper functioning of the investment industry, and the protection of public investors, depends upon each registered representative executing his or her duties with honesty. This is particularly so with respect to the information which the registered representative puts into documents and systems relating to the suitability of investments. It is impossible and impracticable for the employer to check that information before it is acted upon. The same goes for the signature on a document or the use of a document. Others using the document must be able to have total confidence that the document was signed by the person whose signature apparently appears on the document and that the document is being used properly. It is these fundamental principles that Mr. Eley abused. (Eley (Re), 2014 IIROC 52, para. 52)
[43] The misconduct in this case began shortly after Eley’s period of close supervision expired under the 2014 decision. The misconduct is materially identical to that which gave rise to the 2014 decision. IIROC counsel sought a permanent suspension of Eley in the Sanctions Hearing. The IIROC was satisfied that a lesser sanction could properly serve the goals of specific and general deterrence. The OSC was satisfied that the IIROC’s sanctions decision was reasonable.
[44] I see no error of law and no palpable and overriding error of fact in the OSC’s decision in respect to sanctions. Sanctions decisions are afforded considerable deference, both in this court and during the hearing and review before the OSC. I would add that the argument before us – essentially “no harm, no foul” – is unpersuasive. The misconduct here was serious. It reflects on Eley’s integrity. On the facts, as found, in the context of the prior discipline decision, it would have been open to the IIROC panel to conclude that Eley had engaged in a longstanding pattern of misconduct and had shown himself ungovernable. The IIROC panel did not go so far in its Sanctions Decision, and the OSC was satisfied that this moderate approach to sanctions was not an error in principle. It is arguable that the sanctions imposed approach the boundary of permissible leniency, in the circumstances of this case: there is no reasonable argument that the sanctions were too harsh.
Disposition
[45] The appeal is dismissed. Counsel advise that they have agreed upon costs.
“D.L. Corbett J.”
I agree: “Edwards R.S.J.”
I agree: “O’Brien J.”
Date of Release: April 6, 2023
CITATION: Eley v. Ontario Securities Commission, 2023 ONSC 2168
DIVISIONAL COURT FILE NO.: 215/21 DATE: 20230406
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Edwards R.S.J., D.L. Corbett and O’Brien JJ.
BETWEEN:
Douglas John Eley
Applicant
– and –
Ontario Securities Commission and Investment Industry Regulatory Organization of Canada
Respondents
REASONS FOR DECISION
D.L. Corbett J.
Date of Release: April 6, 2023
[^1]: The tribunal’s name has been changed from the OSC to the “Capital Markets Tribunal”. For this decision, I use “OSC” throughout, the name in use at the time of the decision below.
[^2]: At the time of the OSC Decision, the right of appeal was conferred by Securities Act, s. 9(1). The Act was amended in 2022, and the provision (unchanged in substance) is now numbered s. 10(1).
[^3]: The OSC refused to admit fresh evidence tendered by Eley at the OSC hearing (Decision, paras. 26-40), and this decision was not raised as an issue on this appeal.