A judge rejected every claim - and had sharp words about the advisor's credibility
An Ontario advisor's $53.5 million lawsuit against the MFDA and OSC has been thrown out, with a judge finding no wrongdoing by regulators.
The Ontario Superior Court of Justice dismissed every claim brought by mutual fund advisor Valery Herner against the Mutual Fund Dealers Association of Canada (MFDA) and the Ontario Securities Commission (OSC), in a decision released August 26, 2026.
Herner, who sold mutual funds in Ontario, sued after a rocky stretch that began with former clients' complaint that he had recommended unsuitable investments to them in 2011. The MFDA opened a case assessment into the matter in September 2013. The regulator issued a notice of hearing in March 2016, held a disciplinary hearing that November and December, and its hearing panel ultimately dismissed the allegations against him in January 2017.
Herner argued the MFDA's handling of that process, combined with the OSC's review of his registration applications after he switched dealers in 2015 and 2016, cost him clients, assets under administration, and income. He accused the MFDA of malicious prosecution and negligent investigation, and accused both regulators of misfeasance in public office, abuse of process, intentional interference with economic relations, and civil conspiracy. He sought $47.5 million for past and future lost income and the value of his book of business, plus $5 million in general damages and $1 million in punitive damages.
Justice Bordin rejected every claim. On malicious prosecution, the court found the MFDA had reasonable and probable grounds to pursue its case and no malice in doing so, framing it as a routine regulatory prosecution rather than the kind of exceptional case the tort is meant to address. The negligent investigation claim failed because the MFDA owed Herner no duty of care and, in any event, did not breach the standard expected of an investigator. The civil conspiracy, misfeasance, and abuse of process claims collapsed too, with the court finding no unlawful agreement, no bad faith or improper purpose, and no legal process of the kind the abuse of process tort requires.
The judge also found Herner an unreliable witness at trial, writing that he was “loose with the truth.” Even setting liability aside, the court reviewed the damages evidence and concluded Herner had not proven any loss of assets under administration or income caused by the regulators' conduct.
If the parties cannot agree on costs, they have until September 30, 2026 to request a hearing before Justice Bordin, or the issue will be deemed settled.
For MFDA and OSC compliance teams, the ruling shows how high a bar advisors face when trying to turn dissatisfaction with a regulatory investigation into a tort claim, and it reflects the deference courts extend to regulators exercising professional judgment during enforcement.
