Vic Alboini says Canada’s brokerage industry regulator has notified him it will not hold a new hearing in the long-running legal dispute involving his boutique investment firm, Northern Securities Inc., following an appeal decision in his case last year.
The Investment Industry Regulatory Organization of Canada (IIROC) notified Mr. Alboini Friday by e-mail that it has decided not to proceed with a new hearing after part of its 2012 decision against the firm was overturned in December and sent back to IIROC for a new hearing.
The e-mail notifying Mr. Alboini of the decision, sent by IIROC senior enforcement counsel Charles Corlett, said the deadline for IIROC to advise whether it would rehear the case was Friday.
Mr. Alboini has been an active participant in many small takeover deals in Canada, and was an early, outspoken critic of technology firm BlackBerry Ltd. before its business problems were acute.
The original IIROC decision in his case in 2012 found that Mr. Alboini had improperly “obtained access to credit for his client, Jaguar Financial Corp.” and risked the capital of both Northern Securities and its carrying broker as a result. He was suspended for two years, permanently banned from being an “ultimate designated person” and fined a total of $750,000.
IIROC also imposed penalties on Northern Securities’ former chief compliance officer, Fred Vance, and on former chief financial officer, Douglas Chornoboy.
Northern Securities appealed the IIROC decision to the Ontario Securities Commission, and won a partial victory in December.
The OSC overturned one count – an allegation that the firm and its officials failed to correct deficiencies found in IIROC compliance reviews – and sent it back to IIROC for a new hearing.
In its December decision, the OSC said it considered entirely dismissing the count because of the difficulties in redoing the hearing, but said it concluded IIROC should have the option to decide whether it wants to hold a new hearing in the matter.
The OSC upheld other counts in the case, including the ruling that Mr. Alboini improperly obtained credit for Jaguar, but overturned the penalties awarded by IIROC for the violations, saying the hearing was “procedurally unfair.”
The OSC said IIROC should not have announced serious penalties at the same time as the decision, without giving Mr. Alboini and the others an opportunity to make arguments at a separate penalty hearing.
The OSC said it would hold a new penalty hearing this year to determine the appropriate sanctions – including the suspensions and ban imposed on Mr. Alboini. The hearing is expected to occur in June.
In late 2012, IIROC ordered Northern Securities to stop managing client funds and transfer accounts elsewhere because of its ongoing financial problems.
In March, 2013, Northern Securities reached a settlement with IIROC agreeing to stop dealing with the public as a broker. It admitted it did business with insufficient capital in late 2012 and early 2013, and admitted it was operating without a chief financial officer at the time to oversee operations.
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