Court dismisses suit against BCSC

A British Columbia court has tossed out a lawsuit against the B.C. Securities Commission (BCSC) as well as several current and former employees that alleged an enforcement investigation was conducted in bad faith.

The Supreme Court of B.C. dismissed a lawsuit brought by Forum National Investments Ltd. against the BCSC and six of the regulator’s employees at the time. The lawsuit alleged that the company was damaged by a negligent investigation into trading in the company’s shares.

“The main force of the plaintiffs’ submission is that they have been harmed by a flawed and unconstitutional investigation process and they have a right to seek damages and other relief,” the court said in its decision.

Yet the court found that the claim against the regulator was bound to fail, and ordered that the case must be dismissed.

However, in the same ruling, the court declined to dismiss an accompanying claim brought by a retired stockbroker, Douglas Corrigan, who was initially named as a respondent in related BCSC enforcement proceedings that were later dropped.

According to the court, Corrigan’s claim alleged that the regulator coerced his former employer, Mackie Research Corp., to fire him in exchange for dropping an investigation into the firm.

The allegations have not been proven.

The court found that while Corrigan’s complaint has problems, his claim could be amended to address those issues.

“I have significant doubts about the prospects of success for Mr. Corrigan’s claim. However, even when I assess it through a sceptical lens, I am unable to say that it is bound to fail,” the court said in its decision.

“Mr. Corrigan’s current pleading is significantly deficient. It cannot stand in its current form,” the court said, ruling that he should be given 60 days to amend his claim “to comply with the requirements of the cause of action he alleges against the BCSC.”

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.