B.C.'s highest court has overturned a ruling by the province's securities regulator, concluding that a man who advised a client to lie to investigators had not obstructed justice by doing so.
In 2020, a panel of the B.C. Securities Commission concluded that Hunter Wei-Shun Wang and a colleague had obstructed justice in the case, and the following year it ordered him to pay a $30,000 penalty and banned him from the province's financial markets for two years.
WHAT HAPPENED
The conduct that led to these punishments occurred in 2014. At that time, Wang was a lead strategist for an insurance company called FS Financial Strategies, Inc.
He and his colleague Jing "Janet" Zhang – who was marketing director for FS at the time – convinced a 28-year-old man to invest $25,000 in a product the company was offering, according to previous BCSC decisions.
Shortly after making the investment, the investor changed his mind and asked for a refund. The investor's mother called the BCSC to complain, and an investigator contacted Wang, the BCSC said in a news release Friday.
Wang and Zhang coached the investor on the false information he was supposed to give to BCSC staff, and listened in while he called the commission to deliver it, according to the panel.
"This fabrication was clearly an attempt to cause the investigator to stop pursuing investigation of the complaint," the BCSC panel wrote in its decision on the case.
THE APPEAL
In its statement Friday, the BCSC noted that Wang's appeal "did not contest the panel's factual findings." Rather, he appealed the panel's decision on two legal grounds.
First, Wang argued that the obstruction provision of the provincial Securities Act pertained only to concealing or withholding evidence in the context of a formal investigation.
The three-judge panel of the appeal court rejected this argument, finding that the word "investigation" in the Securities Act was intended to mean "both formal and informal investigation processes."
Second, Wang argued that the obstruction provision only applied if the alleged obstruction occurred before an investigation had begun.
On this, the appeal court judges disagreed. One of the three rejected Wang's argument and sought to dismiss the appeal, but the other two found it persuasive and decided to allow the appeal.
Writing for the majority, appeal court Justice Lauri Ann Fenlon concluded that the wording of the Securities Act was not ambiguous, and plainly meant that obstruction could only occur before an investigation was underway.
Concealing or withholding evidence after an investigation had begun, Fenlon wrote, could still constitute obstruction if it was committed in anticipation of some other proceeding under the act, such as an examination, inspection or hearing.
In 2020, according to the BCSC, the Securities Act was amended to remove the word "before," but that amendment took place after Wang's conduct.
Fenlon agreed with her dissenting colleague that it was unlikely that the legislature intended, when writing the Securities Act, for this particular scenario to occur, but added that that alone was not a reason to reject the appeal.
"The interpretation my colleague endorses (and indeed which is expressly captured by the 2020 legislative amendment) undoubtedly provides for a more seamless and effective tool for penalizing obstructive conduct that could frustrate the commission’s supervisory role in protecting investors," the judge wrote in her decision.
"But, absent ambiguity and absurdity – which I do not see here – no departure from the plain meaning is permissible."
In upholding the appeal, Fenlon remitted the matter to the BCSC panel for consideration of an alternative allegation against Wang, namely that he had engaged in conduct that was abusive to capital markets.
