Heather Zordel, the new chair of the recently restructured Ontario Securities Commission has resigned, just seven months after she was appointed to lead the board of Canada’s largest securities regulator.
Ms. Zordel, a Bay Street lawyer, was appointed in March by the Progressive Conservative government of Ontario Premier Doug Ford, immediately prompting two high-profile board resignations in protest.
Ontario Finance Minister Peter Bethlenfalvy received Ms. Zordel’s resignation on Friday, effective immediately, spokesperson Emily Hogeveen confirmed on Monday.
“We thank Mrs. Zordel for her work modernizing the governance and mandate of the OSC and moving Ontario closer towards being one of the most attractive capital markets jurisdictions in the world,” Ms. Hogeveen said in an e-mailed statement. “We will have more to say on the new chair in the near future.”
Ms. Zordel could not be reached immediately for comment.
She was the first chair selected under the OSC’s new structure, implemented earlier this year to modernize the regulator. Under the old system, the regulator was overseen by a group of commissioners who functioned like a traditional board of directors, but who also acted as adjudicators in enforcement proceedings. The new structure separated the tribunal from the board. Ms. Zordel was just the second woman in the OSC’s history to serve as chair.
But when Ms. Zordel’s appointment was announced in March, it immediately caused a stir. Ms. Zordel had a previous, contentious term as a commissioner between 2019 and 2021, which ended not long after a majority of commissioner peers recommended against her reappointment. Her elevation to chair a little more than a year later prompted two sitting commissioners – lead director Lorie Haber and Craig Hayman, the chair of the OSC’s governance and nominating committee – to resign in protest.
She has also been criticized by investor protection advocates for some of the views she espoused in two decisions she worked on during her first stint with the OSC.
In both cases, she was part of a three-person adjudicative panel, but dissented, in part, from the majority. Her dissents were two of just three dissents in OSC enforcement proceedings over the past decade, according to the regulator’s records.
In her dissents, Ms. Zordel differed from the other two members of each adjudicative panel on several core issues in securities law. Those issues include what constitutes material, non-public information (MNPI), which can lead to illegal insider trading. She also disagreed with other panelists about how much leeway an investment fund has to deviate from its offering memoranda before its actions become fraudulent.
Although dissents are considered an important part of jurisprudence and allow for an array of opinions, Ms. Zordel’s findings came under fire from investor protection advocates for being too forgiving of questionable conduct and, in other cases, being incorrect in law.
Philip Anisman is a securities lawyer who has a wide range of professional experience, including adjudicating cases as an OSC commissioner and defending clients accused of wrongdoing. He said Ms. Zordel’s dissents were well written, but some of the views she espouses in them would, if enacted in law, set investor protection back between 50 and 100 years.
“One has to ask whether the government, in appointing a person who holds these views, itself has an orientation toward securities regulation and investor protection that is inconsistent with the history of securities regulation in this country to date,” Mr. Anisman said.
In its most recent annual report, the OSC also disclosed that Ms. Zordel was its highest paid part-time commissioner in its last fiscal year, April 1, 2021 to March 31, 2022 – despite the fact she did not serve as a commissioner during that time period.
Ms. Zordel made nearly $243,000, the vast bulk of which was paid for the hours she spent researching and writing her dissents in those two cases. Although she was not a sitting commissioner during that period, she was required to review submissions in the cases, research the law and make rulings. The next highest paid part-time commissioner in the OSC’s last fiscal year made $133,500.
During the period when Ms. Zordel submitted her billings, the OSC paid part-time commissioners on a per diem basis, or a daily rate. The guidelines at the time, which have since changed, state the maximum a part-time commissioner can charge over a 24-hour period is $1,500.
Ms. Zordel has spent most of her legal career advising entrepreneurs who run junior mining and energy companies, as well as growth-focused technology companies and private businesses, which tend to be riskier investments than large, established corporations. Before her appointment as chair, she was a partner at Gardiner Roberts LLP.