Ontario's securities watchdog has permanently banned Garth Drabinsky from becoming a director or officer of any company, bringing to a close a 16-year-old case against the former theatre impresario.
Drabinsky, who defrauded investors of an estimated $500 million, is also prohibited from acting as or becoming a registrant in the province, the Ontario Securities Commission said Friday.
The OSC case against Drabinsky was first launched in 2001, but was put on hold until the conclusion of his criminal case for his role in the Livent Entertainment scandal.
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Drabinsky was found guilty of two counts of fraud and sentenced to a five-year prison term back in 2009 for manipulating company financial statements and orchestrating a kickback scheme. He appealed the convictions all the way up to the Supreme Court of Canada, which dismissed the application.
Two other executives, Gordon Eckstein and Myron Gottlieb, were also found guilty of fraud in the Livent scandal and later banned from serving as directors or officers of a public company under settlements reached with the OSC.
At its height, Livent produced shows including The Phantom of the Opera and Ragtime across North America, the United Kingdom and Australia. The company sought bankruptcy protection in 1998 and was sold off three years later.
Drabinsky is also prohibited from buying or trading securities — but with several exceptions, including if the trading takes place in an RRSP or through a registered dealer in accounts opened in his name only.
In its decision released Friday, the OSC said it imposed only limited trading bans because it does not feel that prohibiting Drabinsky from making routine personal investments is necessary to protect the public.
Drabinsky's lawyer, Richard Shekter, said his client had offered to settle the case. But he was turned down because the OSC didn't agree that he should be permitted to set up an RRSP or a family company that he can use to minimize personal taxes and assist with estate planning.
During hearings, staff for the OSC had argued that the restrictions are needed in order to deter Drabinsky and others involved in the public markets from committing financial fraud, and send a strong message that abusing public trust will lead to both criminal and regulatory consequences.
Drabinsky's counsel had argued that he has unique and valuable talents as a creative producer that the entertainment industry can benefit from. His lawyers also said that the time he'd spent incarcerated and the restrictions he was agreeing to already send a strong message of deterrence to the capital markets.
Shekter said his client is happy that the commission supported his ongoing creative role with Teatro Proscenium, after thoroughly reviewing the theatrical-production company's structure and its contract with Drabinsky.
"On the stuff that we fought we won the majority of it," Shekter said. "The recognition of Garth's role as a creative producer and its affirmation by the OSC was very gratifying."
But he noted that Drabinsky is disappointed that he wasn't given the ability to operate his family company for the purpose of estate planning for his family and his children.
Shekter said he's currently reviewing the decision, especially regarding the family company component, but that it's too soon to say whether an appeal is in the works.