Divisional Court Releases Decision in The Brian Costello Matter

TORONTO - The Divisional Court yesterday released its decision in the matter of Brian Costello. The Court dismissed all aspects of Mr. Costello’s appeal but for the issue of the costs order which the Court directed to be reconsidered by the Commission.

The Court affirmed the Commission's finding that Mr. Costello was acting as an "adviser" as defined in the Securities Act in that he was making recommendations on specific securities during his investment seminars. He therefore should have been registered under the Act. The Court affirmed the Commission's decision that "advising" applies notwithstanding there is no one-on-one relationship. The Court rejected the US law that Mr. Costello relied upon. This is the first case in Canada where the Courts have interpreted the meaning of "adviser" under securities legislation.

In addition, the Court affirmed that the Commission properly used its public interest jurisdiction in concluding that Mr. Costello failed to disclose his numerous conflicts of interest.

On costs, the Court affirmed that the Commission is "procedural master in its own house" and that the Commission can choose a fair procedure to follow in ordering costs that provides appropriate support for the costs requested. In doing so, the Court clarified its reasons for decision in the Piergiorgio Donnini matter.

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