The Ontario Securities Commission (OSC) recently published reasons for its decision on whether to stay a decision of the OSC’s Director of Compliance and Registrant Regulation (Director), pending the OSC’s review of that decision. Although the fact situation is unusual, the short case is worth reading because it deals with a fairly common situation: what are your options and potential outcomes if you think a Branch Director’s decision goes too far?
In this case, a mutual fund dealing representative (Mason) had become a volunteer, Lay Minister at his church. To address concerns about the potential conflict of interest arising from this outside business activity, the Director prohibited Mason from acting as a dealing representative for any person who was a member of his church’s congregation and required terms and conditions to that effect to be included in his National Registration Database (NRD) profile. In light of these terms and conditions, Mason’s sponsoring firm required him to ask prospective new clients if they were members of his church. His branch manager also adopted a practice of contacting his prospective clients to confirm they were not members of the church.
Mason recognized the need to have boundaries between his roles, but he challenged the manner in which the Director imposed those boundaries (i.e., the terms and conditions) and the restrictions’ impact on his human rights. He sought a review of the Director’s decision and asked the OSC to stay that decision and have the terms and conditions removed from his NRD registrant profile in the interim. At the OSC hearing, Mason raised a number of interesting arguments, including that it was intrusive for him to ask prospective clients about their religious affiliations and that publishing the terms and conditions on the NRD unfairly put him at a disadvantage compared to other representatives. However, he could not prove that his business was suffering as a result of the terms and conditions.
At the motion hearing, the OSC held that there was a serious issue to be tried. It concluded, however, that the harm that Mason claimed he was suffering was speculative. The OSC ruled that absent any evidence of irreparable harm or damage to the public interest, the terms and conditions would be maintained until the hearing of his case on the merits, which is scheduled for later this spring.