Securities dealers say OSC trying to shut them down

The nine member firms of the Securities Dealers Society of Ontario (SDS) have launched a lawsuit against the Ontario Securities Commission (OSC) and the OSC’s chief compliance officer, Donald Page, over a draft policy statement affecting the marketing and sale of penny stocks.

The statement of claim filed with the Ontario Court, General Division, alleges, in part, that the OSC and Page “are acting in bad faith and outside the proper scope of their statutory powers and duties by the manner in which the defendants have purported to regulate” the security dealers. SDS, formed in December, 1991, contends that the regulations contained in Policy 1.10 are aimed at driving the nine firms out of business. In its claim, SDS states that the policy “goes far beyond the proper scope for a `policy’ issued pursuant to the (Ontario Securities) Act.”

SDS members are seeking damages in the amount of $1 million. Members of the SDS, which raise seed or venture capital through the marketing and sale of penny stocks, do not belong to either The Toronto Stock Exchange or the Investment Dealers Association. SDS members are regulated under the Ontario Securities Act and by the OSC.