BC Securities Enforcement Roundup – January 2013
In January 2013, the British Columbia Securities Commission (BCSC) issued three notices of hearing, two temporary orders, one liability decision and one sanction decision. During January 2013, the MFDA released one liability decision and one liability and sanction decision relating to BC residents.
We’ve included a summary of a few of the cases below.
A BCSC panel permanently banned Eshun and Smith from the province’s capital markets. The panel fined Eshun $750,000 and Smith $500,000. In addition, Eshun, Smith and JV Raleigh were ordered to pay the $5.7 million they obtained from investors as a result of their misconduct. JV Raleigh is also permanently cease traded.
In August 2012, a BCSC panel found that Eshun, Smith and JV Raleigh illegally entered into loan agreements with 81 investors, raising approximately $5.7 million. In doing so, they traded and distributed securities without complying with the registration and prospectus requirements of BC’s securities laws.
A BCSC panel dismissed allegations that Reynolds engaged in market manipulation. The panel found that the evidence did not establish that either of Reynold’s trades resulted in, or contributed to, an artificial price for the company whose share price he allegedly manipulated.
The BCSC’s executive director issued a temporary order and notice of hearing against Cho. The temporary order prohibits trading and investor relations activities. On January 29, 2013, the Commission, by consent, extended the temporary order until a hearing is held and a decision is rendered. The allegations in the notice of hearing have not been proven. Cho also conducted business under the names Interpower Sports and Groops Media.
The BCSC’s executive director issued a temporary order and notice of hearing against the respondents. The temporary order prohibits trading and investor relations activities. On January 29, 2013, the Commission, by consent, extended the temporary order until a hearing is held and a decision is rendered. The allegations in the notice of hearing have not been proven.
A MFDA Hearing Panel fined Lee $55,000 and issued a permanent prohibition after finding that Lee had re-invested redemption proceeds in client accounts resulting in unnecessarily incurred deferred sales charges. Doing this allowed Lee to earn sales commissions. The Hearing Panel also found that Lee failed or refused to attend at an interview requested by the MFDA during the course of an investigation.
A MFDA Hearing Panel found that DeVuono failed to ensure that the investment products and leveraged investment strategy that he recommended to two clients were suitable, and that DeVuono failed to explain the features and risks of the strategy and the underlying investments. The MFDA Hearing Panel will determine sanctions at a later date.
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