TORONTO - The Ontario Securities Commission will seek leave to appeal a court ruling that the regulator overseeing brokerages doesn't have the authority to discipline former members.

Regulators suffered a blow last week when an Ontario court allowed an appeal by Stephen Taub, a former Research Capital Corp. investment adviser, saying the Securities Act did not authorize self-regulatory organizations, or SROs, recognized by the OSC to discipline former members.

"The commission is concerned that investor protection would be weakened if a registered representative could avoid the consequences of breaching SRO rules by resigning from his or her SRO member firm," OSC executive director Peggy Dowdall-Logie stated Tuesday.

"An SRO's ability to take disciplinary action against former members, and former representatives of its member firms, is fundamental to effective investor protection and the functioning of an effective SRO."

The Investment Dealers Association of Canada, which is now called the Investment Industry Regulatory Organization of Canada, alleged Taub had conducted improper trades for clients.

He challenged the hearing panel's jurisdiction on the basis that he was no longer an IDA member.

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