Every month we release an Enforcement Roundup blog that highlights securities law decisions related to BC residents in the previous month. We cover our completed regulatory cases and report on other self-regulatory organizations’ decisions when pertinent. From time-to-time, we also cover criminal cases related to our decisions or investigations.
This Enforcement Roundup contains four British Columbia Securities Commission (BCSC) enforcement decisions and one notice of hearing. The roundup also contains two Investment Industry Regulatory Organization of Canada (IIROC) decisions.
A BCSC panel has sanctioned Harris, Cire, Burke, Kwasnek, Thibert, Paradox Distributors (1992) Ltd., Echo Partners Ltd., SPYru Inc., and U-GO Brands Nutritional Products Inc. for illegally distributing the securities of SPYru and U-GO. The panel also found that that Echo Partners Ltd., U-GO, Cire, and Kwasnek breached a temporary order issued by the BCSC’s executive director in February 2014. In addition, the panel found that each of U-GO and Harris is liable with respect to false information contained in four Exempt Distribution Reports filed by U-GO.
The panel made various sanctions decisions against the individual and corporate respondents.
Harris, Cire, Burke, Kwasnek and Thibert have been ordered to pay administrative penalties ranging from $20,000 to $50,000. They have also been prohibited from BC’s capital markets for periods ranging from three to ten years.
Both SPYru and U-GO were permanently cease-traded by the panel. Paradox is cease-traded and prohibited from engaging in investor relations activities for three years. Echo is cease-traded and prohibited from engaging in investor relations activities for six months, and must pay an administrative penalty of $5,000.
Harris, Cire, Kwasnek, Burke and U-GO have been ordered to pay $636,000 to the BCSC, on a joint and several basis, that being the total amount obtained as a result of their misconduct in respect of U-GO.
A BCSC panel has fined and ordered bans against a BC company and three BC residents for illegally distributing securities.
Ray Sasseville was ordered to pay an administrative penalty of $10,000, and is banned from BC’s capital markets for at least five years. WWTI securities have been permanently cease-traded. Edith Sasseville and Keller were each ordered to pay an administrative penalty of $5,000 with securities market bans of at least one year.
As part of the sanctions, the company and three individuals were each ordered to disgorge $10,000 to the commission as the amount obtained, directly or indirectly, as a result of their misconduct. The four respondents are jointly and severally liable for the $10,000 ordered as disgorgement.
A BCSC panel permanently banned Zhong from the province’s capital markets for fraud, unregistered trading and offering clients false guarantees to reimburse them for any losses.
The panel also ordered that Zhong pay to the BCSC $401,883.44 (the sum of $390,048.90 being the amount Zhong’s clients lost as a result of his misconduct and the $11,834.54 in trading agent fees Zhong earned on these investors’ accounts). Zhong was also ordered to pay an administrative penalty of $250,000.
In May 2015, the panel found that Zhong was engaged in the business of trading in securities on behalf of his clients without being registered, and that he perpetrated a fraud by misrepresenting the true nature of his commissions for Forex trading to investors. The panel also found that Zhong guaranteed at least 10 of his clients that he would return their full principal if they suffered trading losses, a breach of the Securities Act.
A BCSC panel has found that McLeary, who was the CEO and a director of two BC companies failed to file insider reports for trades he made in two companies for which he served as CEO and director.
The two companies – Silver Sun Resource Corp. and Newton Gold Corp. – were BC reporting issuers with their shares traded on the TSX Venture Exchange during the period of McLeary’s trades. Silver Sun’s shares were halted from trading in June 2013.
The panel directed the parties to make submissions on sanctions according to the schedule set out in the findings.
In the settlement agreement, Lewis admitted that he engaged in unauthorized outside business activities involving the preparation of tax returns; engaged in personal financial dealings with several clients; made an unauthorized settlement with a client; and used blank signed client forms to process transactions in clients’ accounts. He also admitted to making improper use of monies from clients’ accounts held outside his firm.
Lewis agreed to the following penalties: A suspension from registration in any capacity with IIROC for five years; a fine of $175,000 which includes disgorgement of fees, and 12 months of strict supervision upon any re-registration with IIROC. Lewis will also pay $20,000 in costs.
In the settlement agreement, Chung admitted that he made unsuitable investment recommendations to a client and engaged in personal financial dealings with the same client.
Chung agreed to a five-year suspension from registration in any capacity with IIROC. He will also pay a fine of $40,000 and $5,000 in costs.
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In March, the BC Securities Commission (BCSC) issued three enforcement decisions and one settlement agreement. The Investment Industry Regulatory Organization of Canada (IIROC) released one settlement agreement relating to a BC resident. The Mutual Fund Dealers Association (MFDA) did not release any decisions or settlement agreements during March relating to BC residents. You can find […]