Mitchell Finkelstein, alleged insider-trading tipping lawyer, walks through the hall way of the Ontario Securities Commission during his trial, Nov. 10, 2011.Brett Gundlock for The Globe and Mail
A tense, five-hour interview by Ontario Securities Commission investigators in October last year was "inappropriate and unlawful," the lawyer for accused stock-tipper Mitchell Finkelstein says, since it was predominantly meant to "incriminate" his client.
Lawyer Gordon Capern told an OSC hearing on Friday that the OSC overstepped its bounds in the Oct. 25, 2010, interview, in which investigators confronted Mr. Finkelstein, a former Bay Street lawyer, with banking, phone and computer records and alleged he had fed confidential information to an old fraternity buddy and pocketed stacks of $100 bills in return.
"They put accusation after accusation to Mr. Finkelstein. That is not the point of an interview, a compelled interview, under the [Securities]Act," Mr. Capern said, arguing that a 1995 Supreme Court of Canada decision involving the B.C. Securities Commission should mean that this kind of compulsory interview can be used only for investigative purposes, not to incriminate someone.
OSC lawyer Donna Campbell said Mr. Capern's interpretation of the law was "unique, novel, and to my mind, has never been made." She said the Supreme Court decision, B.C. (Securities Commission) v. Branch, only limits the use of information from compelled interviews in criminal cases.
Mr. Finkelstein, 42, faces allegations that he tipped Paul Azeff, a former investment adviser with CIBC World Markets Inc. in Montreal, about six pending takeover deals involving clients of Mr. Finkelstein's law firm, Davies Ward Phillips & Vineberg LLP. Mr. Finkelstein was a partner at the firm until the OSC unveiled its allegations last November.
The allegations, which he denies, have not been proven.
Mr. Finkelstein and his legal team were before a three-member OSC panel this week, demanding that his case be thrown out. He claims he was not given enough detail about the allegations, nor enough time to properly respond to them, before they were made public.
After two days of hearings that ended Friday, the OSC panel reserved its decision on Mr. Finkelstein's motion. The panel gave no indication when it would issue its ruling.
On Friday, the OSC's Ms. Campbell argued that Mr. Finkelstein could not have had a "scintilla of doubt" about the details of the allegations against him after the five-hour Oct. 25 interview, and was given ample opportunities to explain his conduct.
Mr. Finkelstein's complaint centres on the OSC's common practice of giving targets of its investigations what is known as a "Wells notice," a term borrowed from the U.S. Securities and Exchange Commission. Unlike in the U.S., the process in Ontario is not mandated by law or governed by formal rules. Whether to issue what the OSC calls an "enforcement notice" is also completely up to the OSC, Ms. Campbell said.
In Mr. Finkelstein's case, it issued a notice to him on Nov. 3, 2010, giving him until Nov. 10 to respond before making his case public on Nov. 11, 2010.
Jeff Gray