March 22, 2023

OSC Chair Heather Zordel is stepping down after just seven months

Ontario Premier Doug Ford’s Progressive Conservative government in March appointed Bay Street lawyer Heather Zordel to head the Ontario Securities Commission.Ryan Walker / The Globe and Mail

Heather Zordel, the new chair of the newly restructured Ontario Securities Commission, has resigned just seven months after she was appointed to lead the board of Canada’s largest securities regulator.

Zordel, a Bay Street lawyer, was appointed in March by Ontario Premier Doug Ford’s Progressive Conservative government, prompting two high-profile government resignations in protest.

Ontario Finance Minister Peter Bethlenfalvy accepted Zordel’s resignation Friday, effective immediately, spokeswoman Emily Hogeveen confirmed Monday.

“We commend Ms. Zordel for her work to modernize the governance and mandate of the OSC and move Ontario closer to being one of the most attractive capital markets jurisdictions in the world,” Hogeveen said in an emailed statement. “We’ll have more to say about the new chair in the near future.”

Mrs. Zordel could not immediately be reached for comment.

He was the first chairman elected to the OSC’s new structure, which was introduced earlier this year to modernize the regulator. In the old system, the regulator was overseen by a group of commissioners who functioned like a traditional government but also acted as judges in enforcement proceedings. The new structure separated the court from the government. Mrs. Zordel was only the second woman in the history of the OSC to be president.

But when Zordel’s appointment was announced in March, it caused an immediate uproar. Ms Zordel had a previous, controversial term as commissioner from 2019 to 2021, which ended shortly after a majority of commissioners recommended her reappointment. His elevation to chairman just over a year later prompted two sitting commissioners — Executive Director Lorie Haber and Craig Hayman, chairman of the OSC’s Governance and Nominating Committee — to resign in protest.

He has also come under fire from investor protection advocates for some of the views he espoused in two decisions he worked on during his first stint at the OSC.

In both cases, he was part of a three-judge panel, but partially disagreed with the majority. His dissents were two of three dissents in OSC enforcement proceedings over the past decade, according to agency records.

In her dissents, Ms. Zordel differed from the other two members of each panel of judges on several key securities law issues. These questions include what constitutes material non-public information (MNPI) that may lead to illegal insider trading. He also disagreed with the other panelists on how much leeway a mutual fund has to deviate from its offering memoranda before its operations become fraudulent.

Although dissents are considered an important part of jurisprudence and allow for a wide range of opinions, Zordel’s findings came under fire from investor protection advocates for being too forgiving of questionable behavior and in other cases illegal.

Philip Anisman is a securities attorney with extensive professional experience, including settling cases as an OSC Commissioner and defending clients accused of wrongdoing. He said Ms. Zordel’s dissenting opinions were well written, but some of the views she expressed in them would set back investor protections by 50 to 100 years if enacted into law.

“One has to ask whether the government, in appointing someone with these views, is biased toward securities regulation and investor protection that is inconsistent with the history of securities regulation in this country to date,” Anisman said.

In its most recent annual report, the OSC also revealed that Zordel was its highest-paid part-time commissioner in its last fiscal year from April 1, 2021 to March 31, 2022 — even though he did not serve as a commissioner during that period.

Ms. Zordel earned nearly $243,000, most of which was paid for the hours she spent researching and writing her dissenting opinions in the two cases. Although he was not a sitting commissioner during that time, he had to review case submissions, study legislation and make decisions. The next highest-paid part-time commissioner in the OSC’s last fiscal year earned $133,500.

At the time Ms. Zordel presented her bill, OSC paid part-time workers a per diem or daily rate. The guidelines at the time, which have since changed, stipulate that a part-time commissioner is limited to $1,500 per 24-hour period.

Ms. Zordel has spent most of her legal career advising entrepreneurs leading junior mining and energy companies, as well as growth-focused technology companies and private equity firms, which tend to be riskier investments than large, established companies. Before his appointment as chairman, he was a partner at Gardiner Roberts LLP.

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