The Ontario Securities Commission has denied a rare request by former investment banker Andrew Rankin to set aside a 2008 settlement agreement that saw him fined and banned for life from working in the securities industry.
In a ruling released Tuesday, an OSC hearing panel said Mr. Rankin has not established “sufficient grounds” to warrant revoking his settlement deal.
Mr. Rankin, a former managing director of RBC Dominion Securities Inc., was found guilty of 10 counts of tipping in a 2005 court decision that was later overturned on appeal. Rather than attempt a second criminal trial, the OSC reached a settlement with Mr. Rankin in 2008 that involved lesser penalties at an administrative hearing, including a $250,000 fine.
Earlier this year, however, Mr. Rankin filed an unusual request to overturn the settlement, saying he wouldn’t have signed it if he had known the star witness against him, Daniel Duic, was being investigated for breaching his own OSC settlement order that banned him from trading shares in Ontario.
The OSC hearing panel ruled Tuesday that Mr. Duic’s trading was an unintentional breach of his own settlement order, and said it was not crucial information that would have affected the outcome of a hearing for Mr. Rankin.
“In our view, the information relating to the unintentional breach by Duic of the Duic Cease Trade Order, including the sanctions ultimately imposed on his by the commission, would not have had that effect,” the panel wrote in its decision.
The hearing panel also said that overturning his settlement agreement “would lead to a perverse outcome” because the OSC could not launch new criminal proceedings against Mr. Rankin because the six-year time limit period has expired.
And the panel said it “noted” that Mr. Rankin did not file his application to overturn the settlement agreement until two years after the public announcement of Mr. Duic’s trading breach.
Mr. Duic reached a settlement with the OSC in 2004, agreeing to pay back $1.9-million of the $4.5-million in proceeds he earned by trading on tips from Mr. Rankin, and accept a ban from trading securities. He also agreed to testify against Mr. Rankin.
In 2008, Mr. Duic agreed to pay a $40,000 fine for breaching the 2004 trading ban. He bought shares of three U.S.-based companies using an account at TD Waterhouse Canada, but said he mistakenly thought the ban only applied to shares that traded on Ontario exchanges, and not U.S. exchanges.
Mr. Rankin, who now lives in California, represented himself at a hearing in May and argued he could have used transcripts of the OSC’s interviews with Mr. Duic over the trading breach to undermine his testimony at a second trial.
“It is my strong, firm belief they would have had a direct bearing on my case,” Mr. Rankin told the panel. “ ... I frankly would have made a different decision. I would never have settled, period.”
The hearing panel said the information about Mr. Duic’s trading breach “is hardly crucial information going fundamentally to Duic’s credibility as a witness against Rankin.” Given that Mr. Duic already admitted to illegal inside trading, the panel said a further breach of the cease trade order could not have “further substantially impaired his credibility,” and said there was also other “substantial circumstantial evidence” against Mr. Rankin beyond Mr. Duic’s testimony.