PUSH come to shove, Patrick Cooney isn't one to back down from a fight.
But the founder of Jory Capital, a small, local investment firm, is likely to admit he's feeling a little battle weary these days. Since starting Jory in 1999, he has been embroiled in a battle with Canada's investment industry regulator.
The Investment Industry Regulatory Organization of Canada (IIROC) licenses brokerage firms and brokers. During its 12-year battle with Jory, Cooney and his firm have been cited and fined for several compliance and regulatory capital violations.
Now he faces being banned for life from running the firm he started, a sanction Cooney says would threaten the firm's independence and could close its doors.
But the row has also sparked a regulatory turf war between the organization and the provincial securities regulator, the Manitoba Securities Commission (MSC).
The MSC has oversight of IIROC's dealings in Manitoba and acts as an appeal body of IIROC decisions.
But the IIROC is challenging the MSC's jurisdiction to intervene in how it polices its members in this province.
The dispute pits provincial interests against national ones, and comes at a time when the federal government is proposing legislation to establish a national securities regulator that could replace the authority of both.
Jory's fight with the IIROC and the national organization's ensuing legal quarrel with the MSC demonstrate the potential difficulties that lie ahead in striking a balance between what's good for financial markets in Manitoba and across Canada.
Central to the dispute is Cooney, a man IIROC has called "practically ungovernable in relation to financial compliance."
Over the last decade, IIROC has fined Cooney and his firm three times over compliance problems and failing to adhere to capital requirement rules -- a measurement called 'risk adjusted capital' ensuring firms don't go bankrupt, putting clients' money at risk.
Cooney admits Jory has had problems, but says it is unfairly targeted by the IIROC for minor transgressions because he has been openly critical of the investment industry.
For almost two decades, he has been a vocal critic of unregulated trading of derivatives, worth about $600 trillion globally.
"How can you ignore that in the whole research game, and then make a call on stocks and bonds?"
He maintains larger players often would prefer to keep average investors in the dark -- advocating diversification and staying in the market -- to keep them paying management fees. Their institutional clients, in contrast, get different advice addressing the global risks.
Cooney says he gave up a career at a large firm working with institutional investors to start Jory, which would bring institutional-level research to the average investor.
He had been ridiculed by peers for his consistently bearish stance, but his market calls, including buying gold when it was about $300 an ounce, have turned out to be fairly prescient. Derivatives played major roles in the 2008 meltdown and the crisis unfolding in Europe.
Even before 2008, Cooney's outlook resonated with high-profile individuals, including Robert Gates, who for a brief period worked as a consultant for Jory before becoming U.S. secretary of defence, a post he held until earlier this year.
For a small firm, Jory has remarkable influence -- as much the result of Cooney's persuasive personality as his market acumen. He has the ear of provincial and federal political power brokers. His firm is a leading dealer of Manitoba bonds and Cooney hosts a weekly radio show.
Yet Jory's run-ins with the IIROC have overshadowed all of this.
And, earlier this year, it appeared Jory had finally lost its fight with the IIROC when it fined Jory and Cooney a combined $220,000 and banned him for life from running the firm -- though he can remain a trader and salesperson.
While none of Jory's violations has ever led to its clients losing money or directly put the public at risk, the IIROC says the firm's long history of violations with Cooney in charge requires stronger medicine.
But Cooney says the IIROC has another motive.
"They don't want Jory to be around."
Warren Funt, the IIROC's vice-president for Western Canada, says that's an "almost silly" allegation.
He says the issue is straightforward: If Jory would shape up, Cooney wouldn't be where he is today.
"Enforcement is the last tool we want to use," Funt says. "It's expensive, awkward and backward looking."
It's not the first time the national regulator has tried to suspend Cooney. The IIROC's predecessor, the Investment Dealers Association (IDA), suspended Cooney for five years for taking a $10,000 advance in 2004 while Jory was under business restrictions regarding capital requirement problems.
An IDA panel found he used a "domineering, manipulative approach" to get the bonus because he had a "personal financial crunch" and was ungovernable when it came to compliance.
Jory eventually appealed to the MSC, which upheld the ruling but set aside the suspension.
It deemed the IDA's assessment that Cooney was "ungovernable" was not based on hard evidence and, instead, largely founded on a memo from the organization's manager of compliance stating Cooney could not abide by the rules, "whether out of incapacity due to lack of cognitive skills or whether due to unethical conduct."
The MSC found Cooney had an "unblemished" record when dealing with the public and prohibiting him from running the firm could lead to its failure. While the MSC agreed fining Jory and Cooney was in the public interest, it ruled "that so restricting one of the few dealers that takes part in local venture capital placement in this market" was not.
But the MSC also ordered Jory to hire an experienced compliance officer to keep onside of the IIROC rules.
Still, Jory's problems continued, leading to the latest penalties, the IIROC says.
Once again, Jory is appealing to the MSC.
But it has also asked the MSC to lift the IIROC restrictions, such as a prohibition on opening new accounts, arguing it can't meet capital requirements if it can't generate revenue.
In turn, the IIROC filed with the Manitoba Court of Appeal to prevent the MSC from lifting the restrictions.
The situation is unprecedented, says Rick Medlock, a former regulator with the IDA.
Now a consultant for Jory, Medlock says the IIROC "pissed off" the MSC by taking its case to the court of appeal.
The MSC now won't consider Jory's appeal of the latest IIROC penalties until the court of appeal decision (a hearing is set for Oct. 20).
"Of course, this whole crunch is happening at a time when the IIROC is trying to position itself to be the national regulator if Canada and all the provinces agree to appoint a national regulator," Medlock says.
He says Jory's transgressions -- while ongoing -- are like "parking ticket" and if the firm had really run afoul of the investing public, the IIROC would have shut the doors.
Rather, the IIROC's dealings with Jory have reached a point where it's less about protecting markets than saving face.
"Are they a good candidate to be a national regulator if they can't manage a firm like Jory Capital -- this little shop in Winnipeg with a few clients?" he says.
"They feel that if they don't do something about it, that in the eyes of the street, they've failed as a regulator."