Drabinsky banned from capital markets

Ruling puts cap on drawn-out case

The Ontario Securities Commission has permanently banned former theatre mogul Garth Drabinsky from participation in Ontario’s capital markets, capping a long-running legal and regulatory drama stemming from his time at now defunct Livent Inc., where he was co-founder and chief executive.

The three-member panel that heard Drabinsky’s case earlier this year, headed by OSC vice-chair D. Grant Vingoe, allowed some limited “carve-outs” to the sanctions sought by the regulator’s staff that relate to personal trading activity.

“The public interest requires that we order the permanent bans requested by (OSC) Staff that are designed to prevent Mr. Drabinsky from acting in a position of trust and authority for entities that may participate in the capital markets,” the panel of OSC commissioners wrote in a 21-page decision released Friday.

“These sanctions follow from the need to deter Mr. Drabinsky and others from the misconduct reflected in his criminal convictions.”

Drabinsky was convicted of fraud in 2009 in connection with his time at Livent, and ultimately sentenced to five years in jail. Justice Mary Lou Benotto found that he and partner Myron Gottlieb “systemically manipulated the books” at the live theatre company, which they ran.

Drabinsky served 17 months in jail and completed the balance of his sentence on probation and day parole, where evenings were spent in a halfway house, according to the OSC decision.

His criminal conviction was the basis for the OSC proceeding that concluded with the decision and sanctions imposed Friday. Gottlieb resolved the commission’s issues with him earlier through a settlement in 2014.

Through his lawyers, Drabinsky had agreed that some OSC sanctions were reasonable, but asked for several carve-outs to allow him to pursue business opportunities as a creative producer and to trade in accounts maintained at a registered dealer.

“Since Mr. Drabinsky’s misconduct had a limited connection to trading in securities through brokerage accounts, we have accepted Mr. Drabinsky’s submissions on this point, imposing limited acquisition and trading bans,” the decision said.