Norshield Appeals Dismissed

Date: Friday, November 4, 2011
Author: Advisor.ca

Two appeals of a Ontario Securities Commission ruling against senior executives at the now-defunct Norshield Asset Management have been dismissed by the province’s divisional court.

When the Montreal-based fund manager collapsed in 2005, most of the $159 million invested by its 1,900 retail investors was lost.

The appeals were filed by former Norshield chief executive John Xanthoudakis and former president Dale Smith.

In the first appeal, the court upheld the OSC panel’s decision in Feb. 3, 2009 rejecting a motion to suspend the proceeding against the two men.

In the second appeal, the court ruled there was no basis to find that Xanthoudakis and Smith were denied a fair hearing by the OSC panel.

The administrative tribunal conducted hearings on the Norshield matter in late 2008 and May 2009.

In August 2010, the OSC ordered that Xanthoudakis and Smith must pay more than $2 million each.

The Ontario regulator said in its ruling that Norshield investors were “consistently and continually” treated unfairly by the fund’s managers for several years.

Although it didn’t appear that Xanthoudakis and Smith benefited financially from their conduct, the OSC said the breach was serious enough to warrant the large fine.

Both men were also banned for life from trading securities and from acting as a director or officer of any registered company.