In judgment issued on Wednesday, Justice Ian Winder rejected OSC’s bid to enforce in The Bahamas sanctions issued for breaches of Ontario Securities regulations.
Justice Winder ruled that the $20 million sanction issued by the Ontario Securities Commission against Wayne Pushka, was a government penalty and not enforceable in this jurisdiction.
The OSC had claimed that between the initial finding against Mr in August 2013, and the determination of the appropriate sanction in August 2014, Pushka removed from the Canadian jurisdiction over $13.5 million and alleged that nearly $5 million Canadian dollars were transferred to The Bahamas and the balance to a trust company in Liechtenstein.
It was also alleged that property in Lyford Cay was purchased from the funds removed from Canada.
Justice Winder said: “There is no allegation or suggestion that Pushka engaged in fraud of any kind.”
Justice Winder’s judgement underscored the principle that sovereign nations do not enforce the penalties of foreign governments.
The judge rejected the OSC’s submission that the purpose of the proceedings was to facilitate the return of funds to harmed investors and he noted that this case did not involve the recovery of moneys defrauded from investors.
He observed that The Bahamas is available for receivers to recover money for harmed investors.
It is not, however, available to foreign governments seeking to enforce fines and penalties.
When asked about the proceedings, Pushka said: “The process in The Bahamas was balanced and fair. In Ontario, the original proceedings were in the OSC’s tribunal system, where the plaintiff, prosecutor and judge are all from the same organization.
“It was refreshing to have my case heard in The Bahamas where I was before an independent judge, as opposed to Ontario.”
Pushka continued: “When the OSC hit me with a $20 million penalty it was a shock, since in our earlier settlement discussions, OSC staff had proposed $210,000. I don’t know the reason for the massive increase.
“Perhaps it was because during the period in‐between they had the rules changed so the money they obtained from sanctions went into an internal slush fund at the OSC, to be used for their own purposes or launching new programs.”
Justice Winder did not find the OSC’s submissions credible.
In particular, with respect to a document authorized by two Vice Chairs of the OSC, the judge considered the document an impermissible attempt by the OSC to change the nature of the proceedings.
Adopting a substance over form approach, Justice Winder regarded the substance of the proceedings to be penal and expressed the view that parties should not be allowed to “change the facts to suit specific goals and outcomes”.
Justice Winder refused to allow the nature of the proceedings to be treated as “a moving goalpost adjustable to suit the vagaries of the jurisdiction in which enforcement is sought”.
Pushka said: “It is disturbing, but unfortunately not surprising, that those who act as judges in the OSC’s tribunal system change the facts and move the goalposts.
“That sort of behavior appears to be endemic throughout their organization. If you couple this with the thousands of vaguely worded and constantly changing regulations the OSC issues, it is no surprise that companies are reticent about being public in Canada.
He added: “It can be very costly dealing with the OSC, as the key executives and ultimately the stakeholders of Corel, Nortel and Blackberry can attest.”