Norshield Chiefs Lose Appeals

Nov 4 2011 | 10:24am ET

The former heads of collapsed Canadian hedge fund Norshield Asset Management suffered a pair of legal setbacks this week in their battle with the Ontario Securities Commission.

John Xanthoudakis and Dale Smith, the CEO and president of Norshield, respectively, had their appeal of the OSC's administrative action against them last year rejected. The OSC said that the Ontario Superior Court of Justice found that the regulator was "careful, comprehensive and complete" and that Xanthoudakis and Smith were not denied a fair hearing.

The court also rejected a second appeal by the men accusing the OSC of bias against them.

The OSC last year permanently barred Xanthoudakis, who was arrested earlier this year for his alleged role in another fraud case, and Smith, and fined the two men more than C$2 million each.

Investors lost some C$159 million when Norshield collapsed six years ago. According to the OSC, the hedge fund promised to invest its assets in U.S. hedge funds, but actually invested in offshore funds.

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