Conduct Unbecoming
The Ontario Law Society Tribunal Hearing Division has found misconduct and ordered a penalty hearing
The Law Society more specifically alleged that Mr. Daley obstructed the OSC investigation by:
1. failing to comply with an OSC summons;
2. dissuading the public who received the OSC’s summonses from complying with their summonses; and
3. orchestrating and publicly posting a publication (the May 4 email) that undermined the OSC’s public interest mandate, undermined the effectiveness of OSC’s power to summons individuals, and contained disparaging comments about the intention of the OSC’s investigators.
For the following reasons, we find that Mr. Daley engaged in conduct unbecoming as alleged except in respect of the “orchestrating and posting” of the May 4 email. A penalty hearing will now be scheduled.
Background
Mr. Daley and Mr. Wilkerson are the two founders of the Ascension Foundation. Daley is the Chief Executive Officer and Wilkerson is the Chief Technology Officer of the Ascension Foundation. Daley is a lawyer.
The activity of concern was the sale of a crypto asset token, Lyra/OTO (the Token), native to the Ascension Foundation, a self-described “robust, borderless, wealth generating, free-market ecosystem”. The Ascension Foundation website linked to CryptoWealth.com (CryptoWealth). CryptoWealth acted as the retail sales portal for the Token.
A summons was issued to a purchaser Ontario resident LT
After the summons were issued, Daley and Wilkerson sent a five-page email (the May 4 email) to all CryptoWealth account holders and email list subscribers. Among other things, the May 4 email questioned the legitimacy of Staff’s investigation and the Commission’s public interest mandate, and the validity of the summonses, and provided guidance that a summons recipient need comply only if ordered to do so by a court. The May 4 email was also published on a public website.
LT refused to appear or produce documents in response to the summons issued to him, citing the May 4 email and a conversation with Daley as his rationale. Daley also advised that he would not appear or produce documents. Subsequently, summonses were issued to four other individuals identified as potential purchasers of the Tokens, none of whom complied with their respective summons.
In September 2019, OSC Staff notified Daley and Wilkerson and their respective companies that Staff intended to initiate a regulatory proceeding against them. Wilkerson did not respond. Daley responded confirming his position regarding the summonses and stating that “alerting [their] customers and email list subscribers” in the May 4 email was an action taken for “good reasons”. Daley refused Staff’s offer to schedule an examination to investigate the claims Daley made in his response.
Summons to Respondent
Mr. Daley did not comply with his summons. As concluded above, we do not find a reasonable basis for his stated belief that there was no authority to investigate and no authority to summons him under the Act. As concluded above, we do not accept that choosing not to comply, on the basis that OSC staff would have to bring a contempt application to enforce the summons, is justifiable. As concluded above, we do not accept that Mr. Daley had no effective alternative. He could have sought judicial review of the investigation order and a stay pending judicial review.
Intent
We easily conclude that Mr. Daley’s conduct undermined the administration of justice and tended to bring discredit upon the legal profession. Lawyers should understand and accept the importance of legal compulsion of witnesses in aid of regulatory investigation. Lawyers who refuse to comply with legal authority as occurred in this case, especially with intent to obstruct, engage in conduct unbecoming.
Finding
The Law Society generally alleged that Mr. Daley engaged in conduct unbecoming by obstructing an investigation of the Ontario Securities Commission (OSC) as found by the Capital Market Tribunal in its merits decision.