R.S.0. 1990, c.S.5, AS AMENDED (the "Act")
IN THE MATTER OF
Motion Heard: August 27, 1997
Panel: Morley P. Carscallen - Vice-Chair
Helen M. Meyer - Commissioner
G. Patrick H. Vernon - Commissioner
Counsel: Melanie Sopinka - OSC Staff Counsel
Paul Dufays - Articling Student with OSC Staff Counsel
Arnold H. Zweig - Counsel for Bruce Orsini
DECISION AND REASONS
On August 27, 1997 this matter came on for hearing as an application pursuant to Section 140 of the Securities Act.
The application for review was dated January 7, 1997 in the form of letter from Applicant's counsel. This was marked Exhibit 5 in the Proceedings.
This application arises as a result of an order of the Ontario Securities Commission dated October 31, 1991 (the "1991 OSC Order") which approved aSettlement Agreement entered into between Bruce Orsini and staff of the Ontario Securities Commission, all of which resulted in all exemptions under thenSections 34, 71, 72 and 92 of the Securities Act not applying to Mr. Orsini for a period of 25 years. The Commission's Order and the Settlement Agreementfollowed a 23 day hearing before a panel of the Ontario Securities Commission resulting in a 75 page Reasons for Decision delivered October 18, 1991, reportedat 1991,14 OSCB 4820, and left open the question of penalty.
Separate books of authorities were submitted by OSC Staff Counsel and by Mr. Zweig.
Mr. Orsini gave evidence before the Panel and was cross-examined by Staff Counsel. During his evidence the following Exhibits 1 to 5 were introduced:
|1||Copy of Mr. Orsini's Diploma from the University of Bristol|
|2||Letter dated October 11, 1996 from the University of Bristol|
|3||Letter dated October 21, 1996 from the Registrar of the University of Bristol|
|4||Statement by Andrew Dunning dated May 6, 1997|
|5||Application for Review dated January 7, 1997
Mr. Orsini's stated objectives in asking for the 1991 order to be terminated were twofold. He wants to deserve the respect of his children, his wife's family andothers. He also is embarking on business ventures that require financing and, in his view, such financing may be difficult or impossible to obtain if lenders knowof his trading ban.
Mr. Orsini stated that since the 1991 order he had married, had moved to England, had two young children, and was engaged in reorganizing small businessesand pursuing higher education at the University of Bristol where he had received an MBA in May 1996. He emphasized that his wife and her family were highlyrespected people and he was anxious that he be seen to live up to their high standards.
During his evidence Mr. Orsini was asked by his counsel if he had learned anything since 1991. He said that he discovered that the more people involved withhim in business win the greater would be his own winnings. He enjoyed learning and he craved respect of colleagues. He said that he could now criticallyevaluate all advice given to him. We received no indication that Mr. Orsini was remorseful regarding his past conduct.
In July 1996 he had bought a 50% interest in a company called Sight and Sound Animation in the U.K. which was highly dependent on Christmas displays. Mr.Orsini's partner in this venture was Andrew Dunning who was the author of the statement (admitted and accepted as Exhibit 4) dated April 1997. Mr. Orsiniplaced this company in liquidation in June 1997. The evidence indicates that former employees purchased the company out of liquidation and it appears that Mr.Orsini has no continuing interest in the business and no current relationship with Mr. Dunning.
In both direct evidence and in cross-examination Mr. Orsini made it clear that he had told no one about the 1991 OSC Order. This included Andrew Dunningand all those involved with Mr. Orsini at the University of Bristol and the University of London. There was no indication whether his wife's family, or even hiswife, is aware of the ban.
It appears from the evidence that Mr. Orsini has complied with all the terms of the Settlement Agreement and has not carried on any activity in Ontario contraryto the 1991 OSC Order. It was clear that he was making some effort to rehabilitate himself. He has also co-operated with staff of the Ontario SecuritiesCommission in other proceedings.
The only independent evidence offered in respect of Mr. Orsini's conduct since 1991, aside from records of academic achievement, was a letter of reference fromMr. Dunning dated May 6, 1997. It described the Sight and Sound Animation business and Mr. Orsini's part therein. It concludes with a statement that "He(Orsini) has been very fair and honest in his dealings with me, and he has been a pleasure to work with." This letter was provided by Mr. Dunning at the requestof counsel for Mr. Orsini without disclosure to Mr. Dunning that it was intended for use in a Commission hearing or why such a hearing was taking place. Wehave no reason to believe that the letter is not genuine but in the circumstances we can give it only limited weight.
On more than one occasion Mr. Orsini indicated that he had learned not to accept expert advice unquestioningly. He also stated that he accepted the 1991settlement because he did not expect to be carrying out similar business transactions in Ontario. We are concerned that Mr. Orsini may still believe thatinappropriate professional advice was a major cause of his problems in 1991 and that he does not fully accept responsibility for what happened.
The Panel was addressed by Counsel for Mr. Orsini on the proper test to be applied to applications under Section 140 of the Securities Act. It was commonground between Counsel that the Ontario Securities Commission had not issued Reasons for Decision in any case significantly similar to this application.Counsel therefore presented their argument based on cases involving readmission applications to the Law Society of Upper Canada.
Mr. Zweig submitted on behalf of Mr. Orsini that there were five factors which the Panel should direct itself to in a determination of this matter. Firstly, does the1991 OSC Order itself give some guidance to this Panel? Secondly, the amount of time since making of the 1991 OSC Order since time itself can be a healerand protector for the public. Thirdly, how has the applicant behaved during the period since the 1991 OSC Order and has there been a material change in thatperson? Fourthly, what is the purpose of making the application and how does it determine or bear on the public interest? Fifthly, has the applicant doneanything to purge his guilt. Sixthly, what is the likelihood of this applicant conducting himself in a manner prejudicial to the public?
Having heard the evidence of Mr. Orsini and considered the Exhibits and heard submissions from counsel for both the applicant and OSC staff, we considered theproper tests to be applied.
We reviewed the 1991 Reasons for Decision of the Commission Panel, the 1991 Settlement Agreement and the Order approving it. None of these gave us muchassistance. It is the conduct of the applicant since 1991 and the quality of the efforts he has made to rehabilitate himself and to purge himself of his guilt whichare most relevant in an application such as this.
In this regard we were urged by OSC staff counsel to follow the test set out in Ultramar PLC and LASMO PLC (1991) 14 OSCB 5221 particularly at p.5222where the OSC Panel concluded that Section 140 of the Act should not be applied "except in the most unusual circumstances". We concluded that the Ultramarcase involved facts and circumstances that were sufficiently different from this application that it provided little guidance to us. Counsel for the applicantpersuasively convinced us that we are correct in this.
As a result we were urged by both counsel to consider a number of cases where applications had been made under the Law Society Act for readmission and othercases. These included:
1. In the Matter of the Law Society Act, Donald Colllver Bradbury
2. In the Matter of the Law Society Act, Stephen Lawrence Cappe
3. In the Matter of the Law Society Act, John Richard Cirillo
4. In the Matter of the Law Society Act, Gordon David Goldman
5. In the Matter of the Law Society Act, Roger John Gallaway
6. In the Matter of the Law Society Act, James Frederick Harris Gray
7. In the Matter of the Law Society Act, Edward Henry Luck
8. In the Matter of the Law Society Act, Timothy John Lutes
9. In the Matter of the Law Society Act, Asgarali Mohamed Manek
10. Re Mithras Management Ltd., et al. (1990), 3 0SCB 2389
11. Re Barry W. Young et al. (1994), 17 OSCB 2985
12. Re Allan Sussman and 73307 Ontario Ltd. (1993), 16 OSCB 2212
13. Re Rex G. Heslop et al (1993), 16 OSCB 3448
14. Re The Securities Act and Morton,  O.R. 492 (H.C.J.)
15. Re Goldman, Order and Reasons of Convocation of the Law Society of Upper Canada dated May 5, 1987
16. Re Weisman, Report to Convocation of the Law Society of Upper Canada dated January 27, 1997.
Amongst these we determined that the most helpful was Re: Weisman, Report to Convocation dated January 27, 1997. This case sets out seven criteria bywhich a readmission application should be assessed. They are as follows:
1. As a general rule, an order such as the 1991 OSC order is intended to run its course. Varying or rescinding the order should be the exception rather than therule.
2. The applicant must show by a sufficient course of conduct he is a person to be trusted.
3. The applicant must show that his conduct is unimpeached and unimpeachable which can best be established by evidence of trustworthy persons, especiallypersons with whom the applicant has been associated since the 1991 OSC order.
4. A sufficient period of time must have elapsed before an application for readmission will be granted.
5. The applicant must show by substantial and satisfactory evidence that it is highly unlikely that the applicant will misconduct himself in future if the applicableorder is revoked or rescinded.
6. The applicant must show that his or her past conduct has been entirely purged.
The seventh criteria in Weisman, that the applicant has remained current professionally, is not relevant to this case.
Counsel for the applicant urged that each of these should be applied separately and seriatim to the facts. It was the Panel's view that the criteria should beapplied as a whole to the available evidence.
We have weighed all the evidence against these criteria and have determined not to grant the application. In doing so we were aware that the 1991 OSC Orderwill not expire by its terms for 25 years and that accelerated rehabilitation of Mr. Orsini would accordingly be very desirable. We acknowledge his efforts in thisregard but without a reasonable amount of third party corroborative evidence as to his conduct and more compelling evidence that he has purged his seriousmisconduct that resulted in the 1991 OSC Order we are unable to conclude otherwise than we have.
This application was out of the ordinary course of applications that come before a panel of Commissioners. Accordingly, we are most appreciative of the careand thoroughness which both Counsel gave to the application. Direct examination, cross-examination and arguments were all most helpful to us in ourdeliberations.
November 18th, 1997.
"Morley P. Carscallen"
"Helen M. Meyer"
"G. P. H. Vernon"