Securities regulator slammed for taking 11 years to resolve stock market manipulation case

The Manitoba Securities Commission is being slammed for delays in a process that effectively clears two people of stock market manipulation some 11 years after the investigation into the case began.

"That is an extraordinary delay," says the decision document dated July 16 and released this week. It says such a delay is unfair to people facing the allegations and is harmful to the public interest.

"One of the overriding purposes of securities legislation is to protect the investing public. If hearings are unduly delayed, investor protection is lost," the decision says.

The case alleged that two people in Winnipeg engaged in trading activity that involved "up-ticking and spoofing" shares in Vancouver-based mining and resource company Benton Resources Corp. listed on the TSX Venture Exchange.

A three-person panel held a hearing into the case over five days in May and June this year. The decision says the commission staff failed to prove the allegations against Janice Anne Thoroski and Clair Stuart Calvert. 

The events at issue had happened between November 2009 and February 2010. An investigation by the securities commission was completed by 2011, the decision says, allegations were made against the two people in 2014 and the hearing began May 17, 2021.

"The delay in this matter is very concerning to the panel," says the reasons for decision document issued by the panel of three commissioners that includes a lawyer, an accountant and someone with a securities industry background. 

Stress of outstanding allegations

The decision says individuals and companies who are charged by administrative tribunals such as provincial securities commissions are entitled to be treated fairly. 

"It is fundamentally unfair for investigations and hearings to take years to be completed," the panel wrote. 

"Individuals suffer significant stress. Outstanding allegations may negatively impact job opportunities or job promotions. Memories fade and tangible evidence becomes difficult or impossible to locate," the decision says. 

It also refers to the increase in the cost of legal advice for individuals when there are lengthy delays, with no ability for respondents to recover those costs if they're found not to have committed the offences.

Asked about the concerns over delay, Jason Booth, communications coordinator for the Manitoba Financial Services Agency (MFSA), responded in an email. 

"The Commissioners are independent decision-makers, and we cannot comment on their observations specific to this case," said Booth.  

"That said, Commission staff strive to move cases forward on a timely basis, but in particular situations, there may be delays due to the complexity of a specific case or procedural complications," Booth said. 

The securities commission is a division of the MFSA and is an independent agency of the Manitoba government tasked with protecting investors and promoting fair markets. 

The decision panel in the case concluded by urging the securities commission to review and revise its procedures to ensure that investigations and hearings proceed expeditiously in the future.