News Release
Securities Commission Overturns VSE Decision Against Brokers James Seth Mathers and Arnold Edward Fehr
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Date:
1999-02-12 -
Number:
99/07
Released: 02/05/99 Contact: Michael Bernard
899-6500 or
(BC only) 1-800-373-6393
Vancouver -- The British Columbia Securities Commission has overturned a Vancouver Stock Exchange decision disciplining two brokers because the VSE panel failed to provide reasons explaining its decision.
"The decisions of the hearing panel can have serious consequences," the commission said in reviewing the VSE panel hearing. "Respondents can be suspended or even barred from the industry. Substantial fines can be levied."
"For these reasons, respondents in a disciplinary hearing are entitled to receive reasons from the hearing panel that explain how it arrived at its decision."
The VSE panel had found that James Seth Mathers and Arnold Edward Fehr ought to have known that certain trades they executed were part of a manipulation and therefore their processing of the trades violated the stock exchange's bylaws.
Witnesses who testified at the VSE hearing said they did not believe that Mathers and Fehr ought to have known of the manipulation. The commission found that the VSE panel did not rely on that evidence and likely substituted its own opinion in reaching it conclusion.
The commission said that the hearing panel was entitled to use its knowledge and expertise to substitute its own opinion for that of the witnesses. When it did so, however, it had to give reasons explaining why it rejected the opinion evidence presented at the hearing. Not to do so was contrary to the public interest.
Mathers and Fehr executed trades that were later found by the commission to have been part of a major stock manipulation carried on by Atlantic Trust Management Group and related individuals.
In reversing the VSE panel decision that the two violated exchange bylaws, the commission set aside penalties of $7,500 and costs against Mathers and $10,000 and costs against Fehr as well as suspensions against both. The VSE panel's findings that Mathers and Fehr entered orders in violation of VSE rules was not varied.
The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities and exchange contracts in the province.