The recent decision of the Ontario Securities Commission in the matter of Conrad Black marked the end of the decade-and-a-half-long saga surrounding the sale of various newspapers by the Hollinger Group commencing in 2000. The Commission permanently banned Mr. Black and John Boultbee, a former Hollinger Group executive, from serving as officers or directors of any registrant, issuer or investment fund manager and from becoming a registrant, investment fund manager or a promoter in Ontario. Staff pursued the ban and the Commission issued the order notwithstanding that both Mr. Black and Mr. Boultbee had provided personal undertakings that they would refrain from acting or becoming an officer or director of a public company in Ontario, among other things. Aside from the Commission’s concern that Mr. Black and Mr. Boutlbee could withdraw their undertakings at any time, the decision points to the Commission’s willingness to take into account a respondent’s remorse or acknowledgement of wrongdoing when determining the length and severity of the sanctions to be imposed. In this case, Mr. Black steadfastly refused to acknowledge the legitimacy of the findings made in the United States criminal proceedings surrounding similar issues, and stated during testimony before the Commission that “I broke no laws and I did nothing unethical”.

The details of the saga are well known. In brief, as the Commission outlined in its decision, Messrs. Black and Boultbee received $600,000 in “non-competition payments” in connection with the newspaper sales involving Hollinger, despite never having signed a non-competition agreement or having been asked to sign one by the purchasers. The transactions and payments triggered criminal and regulatory proceedings in Canada and the U.S. against a number of Hollinger entities, Mr. Black, Mr. Boultbee and a handful of other Hollinger executives. OSC Staff commenced prosecution of Hollinger Inc. and Hollinger International Inc., Mr. Black, Mr. Boutlbee and a few other Hollinger executives in 2007. The Commission later stayed the matter in favour of the concurrent U.S. proceedings. Messrs. Black and Boultbee faced criminal proceedings and proceedings commenced by the SEC. At the criminal trial, Black was convicted of three counts of mail fraud and one count of obstruction of justice for concealing documents from an official proceeding. Although two counts of mail fraud were reversed on appeal, Black was sentenced to 42 months in prison (including time served) for the remaining count of mail fraud and obstruction of justice. Mr. Black was released in May 2012. That same year, as a result of the criminal findings and a settlement with the SEC, OSC Staff withdrew its allegations against all of those charged in 2007 except for Mr. Black and Mr. Boultbee. Staff proceeded against the two individuals, alleging that permanent bans prohibiting them from participating in the Ontario securities markets were necessary to protect the public interest in the province.

Mr. Black has been highly critical of OSC Staff’s decision to pursue the case against him and of the Commission’s decision. He argued before the OSC that the Commission should not simply “rubber stamp” the findings of the U.S. courts and the SEC. In addition, given that he is 70 years of age and had offered to remain bound by the undertaking that he gave in 2007 not to become a director or an officer of any registrant, issuer or investment holder in Ontario, Mr. Black took the position that there was simply no need for any OSC order banning him from doing the very things he had promised not to do.

The Commission disagreed. Among other things, the decision shows that an acknowledgment (or lack thereof) of wrongdoing can have a significant impact on any eventual penalties or sanctions. Messrs. Black and Boultbee appear to have suffered the consequences of their decision to maintain innocence throughout the various criminal and administrative proceedings, despite repeated findings of wrongdoing and criminal sanctions. In the OSC proceeding, the Commission found that “both Black and Boultbee demonstrate[d] a total disregard for and indifference to the findings of serious fraud by the U.S. courts”, noting that this disregard raised serious concerns as to the reliability of their assurances that they no longer posed any threat to Ontario’s capital markets.

The Commission concluded that allowing Messrs. Black and Boultbee to rely on their undertaking to refrain from becoming an officer or director of a public company in Ontario would fail to address the need for both specific and general deterrence. However, one is still left to wonder whether the Commission would have been prepared to give greater weight to the undertaking had Messrs. Black and Boultbee not so vehemently denied wrongdoing from the outset (or perhaps expressed remorse following conviction).