Administrative law – Stock brokers – Disciplinary proceedings – Penalties – Decisions of administrative tribunals – Securities Commission – Judicial review – Standard of review – Reasonableness simpliciter
Hogan v. British Columbia (Securities Commission),  B.C.J. No. 131, British Columbia Court of Appeal, January 28, 2005, Finch C.J.B.C., Prowse and Levine JJ.A.
The British Columbia Securities Commission (the “Commission”) found that the Appellant had used the Internet to disseminate misrepresentations about five companies and thereby conduct a blatant and highly effective manipulation of the markets for their shares. At the penalty phase of the proceedings, the Appellant acknowledged that his conduct was in breach of the Act and apologized for his behaviour. Amongst other things, the Commission ordered that the Appellant pay the Commission an administrative penalty of $25,000.00. The Appellant appealed the question of whether the amount of the administrative penalty imposed by the Commission was reasonable.
The court held that the standard of review of the Commission’s decision on penalty was one of reasonableness. In applying the reasonableness standard, appellate courts were not to decide whether they agree with the decision of the Tribunal but were to determine whether there was a rational basis for the decision of the Commission in light of the statutory framework and the circumstances of the case and whether the reasons as a whole supported the decision.
While the court had some reservations about the amount of the penalty, it was unable to conclude that the penalty was unreasonable given the nature of the Appellant’s conduct and the role of the Commission in protecting the integrity of the markets and the public interest. The amount of the administrative penalty in this case recognized the need to deter persons from manipulating the market. The court was not persuaded that a comparison with administrative penalties in other cases by the Commission was determinative, as each penalty would have to be viewed in light of the overall penalties imposed, the particular circumstances of the conduct involved and the Commission’s reasonable perception of what was required in the public interest at the time the penalty was imposed.
The court was not persuaded that the administrative penalty imposed on the Appellant in this case, taken in the context of the overall penalties imposed, was unreasonable. The appeal was therefore dismissed.
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