- Posted April 23, 2013 by
IIROC loses its case against Hampton CEO Peter Deeb
A Hearing panel of the Investment Industry Regulatory Organization of Canada, ordered the regulator to turn over the 4 anonymous letters that lead to a bizarre three year investigation and ultimate dismissal of allegations against Hampton Securities CEO.
In what appears to be an embarrassing breach of IIROC’s own stated commitment to transparency in their dealings with the public, its dealer members and its registrants, the regulator has lost its bid to keep buried 4 anonymous letters used to bring an ultimately unsuccessful enforcement action against Bay Street veteran investor Peter Deeb.
For three years Deeb and his counsel have insisted on IIROC’s obligation to hand over the letters as part of their obligations under rules governing civil proceedings, but IIROC refused, threatening Deeb with further action if he, “pursued the matter”.
The regulator claimed the documents were “Privileged” and that they deserved the protections afforded to a “Whistleblower”. As well, IIROC counsel Andrew Werbowski claimed that they were concerned the letters would ultimately be handed over to the police and used as the bases for criminal proceedings against the alleged authors; former employees, one of which who has himself been banned for life from the industry.
Deeb did pursue the matter and a hearing panel dismissed IIROC’s position as unreasonable, as no claim of attorney privilege can be established between the regulator and an “Anonymous” party. IIROC was ordered to turn over all four letters immediately and without any restrictions on their use. The panel Chair went so far as to state that, “this should have been resolved in 5 minutes, years earlier.”
It is unclear why IIROC would want to impede a criminal investigation against individuals who were allegedly stealing from a member firm. What’s more is that IIROC also failed to post this decision by the panel on its website as is its custom, likely due to the precedent it sets for all other members.
This panel decision will likely be used by many future registrants and their lawyers in dealing with what is sometimes considered an end-justifies-the-means approach by the industry’s regulator. In Deeb’s case a public hearing heard of IIROC staff claiming, ”The Charter of Rights doesn’t apply to IIROC” and that IIROC has the right to subjectively apply varying levels of “Fairness” when dealing with member firms and registrants as it sees fit.
As for Deeb, he says, "I just want to get back to making money for my clients."
The three year investigation is widely considered to have been a misguided witch-hunt and has resulted in calls for IIROC to be reined in, and to treat their members more responsibly and with greater respect.