Vic Alboini asks a question during the Research In Motion (now BlackBerry) annual general meeting of shareholders in Waterloo July 10, 2012.MIKE CASSESE/Reuters
The Ontario Securities Commission has reduced the penalties ordered against investment executive Vic Alboini by Canada's brokerage industry regulator, overturning his lifetime ban from acting as the head of a brokerage firm and replacing it with a two-year suspension.
Mr. Alboini praised the decision Friday as a positive step, but said he will nonetheless appeal the case further to Ontario Divisional Court, arguing the original conviction had no basis.
"But it's definitely going in the right direction," he said.
In its original ruling in 2012, the Investment Industry Regulatory Organization of Canada, which regulates brokerage firms, found Mr. Alboini had risked the capital of Northern Securities Inc. by improperly obtaining credit for Jaguar Financial Corp., which had accounts at Northern Securities. Mr. Alboini was chief executive officer of both Northern Securities and Jaguar.
IIROC fined Mr. Alboini $625,000, ordered him to pay costs of $125,000, imposed a two-year suspension from working as a registrant in the investment industry and permanently banned him from acting as the ultimate designated person in charge of a brokerage firm.
Northern Securities subsequently wound up its client accounts and is now suspended from operating under an IIROC order.
Mr. Alboini appealed the decision and the penalties to the OSC, arguing it was unfair that IIROC imposed such harsh sanctions in the initial merits decision without giving him an opportunity to respond or make submissions about penalties.
An OSC panel hearing the appeal overturned one count in the case – an allegation he failed to correct deficiencies in compliance reviews – but upheld the other allegations. The OSC also held a new hearing in June to reconsider the sanctions, agreeing it was "procedurally unfair" to announce serious penalties without hearing arguments.
In a ruling released Friday, the OSC panel reduced Mr. Alboini's suspension from working in the industry to one year from two, and replaced the lifetime ban from acting as an ultimate designated person with a two-year suspension. The panel also reduced Mr. Alboini's fine to $250,000 from $625,000 and cut the amount of costs he has to pay IIROC to $62,500 from $125,000.
"The ban was incredulously harsh as were most of the sanctions imposed originally by the IIROC panel, so it certainly is better the way it has come down from the OSC," Mr. Alboini said.
The OSC also ruled he will have to pay $244,985 to cover the commissions he earned for trading from a Northern Securities account over a four-month period in 2008. The disgorgement of commissions was part of the original IIROC order and upheld by the OSC.
Mr. Alboini has already filed an appeal of the OSC's decision on the allegations in his case, which was released last December, and said Friday that he will amend the filing to also appeal the sanctions decision.
He said he is currently not affected by the bans from running a brokerage firm because Northern Securities is not operating and he does not know if he will ever again seek to run an investment dealer regulated by IIROC.
Since the brokerage firm's closure, he has renamed its parent company from Northern Financial to Added Capital Corp., and has continued to operate the company as a mergers and acquisitions advisory firm and a merchant bank taking equity positions in small companies and working to restructure their operations. Those roles do not involve operating a brokerage firm with client accounts.
Mr. Alboini has been active in many small takeover deals in Canada, and was an early public critic of technology firm BlackBerry Ltd. before its business problems were acute. He said he continues to be an investor in the company.
The OSC decision Friday also reduced the penalties ordered against former Northern Securities chief compliance officer Frederick Vance, overturning IIROC's order that he pay $100,000 in penalties and costs. Mr. Vance will face a three-month suspension from working as a supervisor, which was part of the IIROC penalty. The OSC overturned all penalties against former chief financial officer Douglas Chornoboy, ordering only that he is reprimanded.
Janet McFarland