What to Include in the Reasons for Imposing a Sanction

In Davis v. British Columbia (Securities Commission), 2018 BCCA 149, http://canlii.ca/t/hrlk7 an investor relations service provider accepted $7,000 from an investor for the purchase of shares that were never obtained. Mr. Davis was found to have engaged in fraud because he “untruthfully told an investor he owned the shares he was selling to that investor. Mr. Davis contends his actions do not amount to fraud because he believed he would receive those shares in the future.” The allegations were established and the sanctions included a lifetime full-market ban.

On appeal, the Court returned the matter for a fresh hearing on sanctions, despite the fact that such dishonesty often resulted in permanent market bans. The Court held that the sanction had to be proportional to the conduct. In this case the reasons of the tribunal did not reflect a consideration of the personal circumstances of Mr. Davis (including his unblemished record, his age, and that the order would end his long-established career) and consideration of whether the alternate available sanctions would be sufficient to protect the public.

Reasons for decision for sanction should include an explicit consideration of the mitigating circumstances and an explanation as to why the lesser available orders are not appropriate in the case. This is true even where dishonesty has been found.

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