Staff of the Ontario Securities Commission (OSC) attempted, in the matter of AiT Advanced Information Technologies Corporation, to vary the securities industry’s understanding of when a reporting issuer should make disclosure of an imminent merger transaction. As earlier reported, in January 2008 the OSC rejected the staff’s view following a hearing in which one of AiT’s directors challenged the allegation that AiT had failed to make timely disclosure and that she, as a director, had authorized, permitted or acquiesced in that failure.
In February 2007, the OSC had approved a settlement of similar allegations arising from the same transaction against AiT itself and another director. Following that decision, AiT and that director agreed to pay a total of $140,000 in administrative penalties and costs.
In the hearing, the OSC found that, on “contested facts,” AiT had not, in fact, failed to make timely disclosure.
What happened next appears to have been a first-time occurrence. After modest prompting from counsel for AiT and the director, who had settled the allegations against them, the OSC staff moved to have the OSC revoke the orders it had made in the settlement proceedings, including the reprimand of the first director, and to return the settlement amounts paid.
Staff acknowledged that as the OSC in the contested hearing had found that no failure to make timely disclosure had occurred in the contested matter, the basis for its orders made in the settlement proceedings had been completely eroded. At a hearing on September 17, 2008, the OSC granted the staff’s request that the OSC revoke its earlier orders against AiT and the first director and that the settlement amounts be repaid to them. In addition to publishing its revocation order, the OSC also published on October 9, 2008, an “oral ruling and reason.” In this statement, the Chair of the revocation hearing commended staff for bringing the matter forward and expressed his regret that the first director had suffered personal and financial consequences as a result of the outcome of the settled matter.