Deutsche Bank’s last effort to delay ABCP hearing fails

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Deutsche Bank Securities Ltd. has hit the end of the road in its efforts to shut down a regulatory hearing into its actions in the meltdown of Canada's non-bank asset-backed commercial paper market in 2007.

The German bank has spent years opposing efforts by the Investment Industry Regulatory Organization of Canada (IIROC) – the country's brokerage industry regulator – to hold a hearing into the firm's conduct in the ABCP debacle, leaving it the only firm in Canada to still have no resolution to its legal matters surrounding the collapse of the ABCP market.

Deutsche Bank initially asked an IIROC hearing panel to shut down its work because of concerns about the bank's ability to call witnesses in the case. Deutsche Bank appealed that decision to the Ontario Securities Commission in 2011, which turned down the request and said the hearing could proceed, arguing it was "premature" for the bank to halt the proceedings before the hearing panel even heard evidence in the case.

The bank then appealed to the Ontario divisional court, which in April this year turned down its request for a judicial review of the OSC decision. On Tuesday, the Ontario Court of Appeal also refused Deutsche Bank's request to hear an appeal of the divisional court decision.

As is standard with requests for leave to appeal, the appeal court offered no reasons for rejecting the request.

Deutsche Bank has argued it can't get a fair hearing because IIROC doesn't have the authority to compel testimony from people who are not IIROC registrants, which means other key participants in the ABCP market in 2007 – such as debt-rating agencies – may not testify in the case.

The OSC, however, has said the appropriate course of action is to allow the IIROC hearing to proceed, at which time the panel will be in a position to judge whether the case against the bank is prejudiced enough to justify staying the proceedings.