Canada’s largest market watchdog is trying to drive a square peg through a round role in its greenwashing case against Som Seif and Purpose Investments Inc., Mr. Seif’s lawyer argued Wednesday during the second day of hearings into what is expected to be a months-long legal battle.
The Ontario Securities Commission alleges that Purpose and Mr. Seif, one of Canada’s best-known money managers, made 19 false or misleading statements about environmental, social and governance, or ESG, investing over several years.
Proceedings before the Capital Markets Tribunal, an independent division of the OSC, began Tuesday and are scheduled to continue through September.
Veteran securities lawyer Joseph Groia of Groia & Company, who is representing Mr. Seif, accused the OSC of presenting information “in a selective manner to construct a narrative that simply is not true.”
“The narrative you heard yesterday from the OSC staff is itself false and misleading, to use their words,” he said in his opening remarks to the three-member adjudication panel, led by chief adjudicator Tim Moseley.
Purpose Investments did not incorporate ESG factors as much as claimed, OSC alleges in hearing
In his own opening statement on Tuesday, OSC lawyer Alvin Qian sought to portray the allegations as “just a classic case of false and misleading advertising." He argued that Purpose failed to incorporate ESG factors into its investment decisions anywhere near the extent that the company and its founder, Mr. Seif, had repeatedly and publicly asserted.
But Mr. Groia said the allegations only exist because the regulator failed to find a genuine greenwashing case to pursue.
“In early 2022, the OSC carried out a street sweep. It went searching for a greenwashing case. When it could not find one, it then started to turn its guns on Purpose, and later, on Mr. Seif,” he said. “They did that because that was their agenda, and they did that, in my respectful submission, without regard to the real facts of this case.”
At multiple points during his remarks, which spanned more than two hours in a downtown Toronto hearing room where Mr. Seif watched from the gallery, Mr. Groia said there was “absolutely nothing” false or misleading about the statements cited by the OSC.
“Purpose’s word was truthful and accurate, and that the only thing that’s wrong with this entire proceeding is that the commission never did the work it was supposed to have done,” he said. “Let me be blunt, if I haven’t already been blunt. Had the OSC done its homework, it would have realized, as you will conclude, that 94 per cent of Purpose’s funds met the Purpose approach to ESG integration.”
Now in his 70s, Mr. Groia has been among Bay Street’s most sought-after securities lawyers for decades. He worked for the OSC’s enforcement division in the 1980s before leaving the regulator in 1990 and quickly developing a reputation for mounting vigorous, even aggressive defences on behalf of executives accused of white-collar crimes.
He most famously represented John Felderhof, former vice-chair of Bre-X Minerals Ltd., who was charged in 1999 in connection to the company’s fraudulent claims of having discovered gold in Indonesia. Mr. Felderhof was acquitted in 2007, and he later told The Globe and Mail that Mr. Groia “has a brilliant legal mind” and is “never fazed and knows how to control a trial.”
In 2011, the Law Society of Upper Canada briefly suspended Mr. Groia’s law licence for “incivility” during the Bre-X trial because of what the legal industry regulator found were multiple examples of “unrestrained invective” and “guerrilla theatre.”
While an appeal panel in 2013 reduced his suspension from two months to one, Mr. Groia continued to appeal his case until it reached the Supreme Court of Canada.
Canada’s highest judicial body eventually sided with Mr. Groia. Its ruling in 2018 said that even though Mr. Groia’s behaviour during the Bre-X trial included “personal attacks, sarcastic outbursts and allegations of professional impropriety,” they resulted from an “honest but mistaken understanding of the law of evidence and the role of the prosecutor.”
In his statement on Wednesday, Mr. Groia effectively launched what amounts to his latest of a long list of attacks against the OSC.
“This is a case about accountability. The OSC wants to hold Som Seif accountable for what it claims are untrue and misleading statements,” he said.
“In return, we want to hold the OSC accountable for what we say the evidence will show is a meritless enforcement case that should never have been brought, that the case is based upon a faulty investigation and a total misunderstanding of the facts in this case.”