BC Securities Enforcement Roundup – July 2014

BC Securities Enforcement Roundup – July 2014

In July, the BC Securities Commission (BCSC) issued seven notices of hearing and seven enforcement decisions. The Investment Industry Regulatory Organization of Canada (IIROC) released one enforcement decision and three settlement agreements relating to BC residents. The Mutual Fund Dealers Association (MFDA) did not release any decisions or settlement agreements during July relating to BC residents.

You can find a summary of some of the recent matters below.

BCSC Sanctions Decision – Theodore Ralph Everett, Robert H. Duke, Micron SystemsInc., and Independent Academies Canada (IAC)

A BCSC panel permanently banned Everett, Duke, Micron, and IAC from BC’s capital markets, and ordered them to pay back approximately $5.4 million. The panel also ordered Everett and Duke to pay a $7 million administrative penalty.

In October 2013, a commission panel found that the respondents committed fraud, illegally distributed securities, and breached the terms of a Cease Trade Order.

In the original notice of hearing issued in January 2013, BCSC staff also named Leonard George Ralph.

In October 2013, Ralph settled with the Executive Director.

BCSC Liability and Sanctions Decision – Rudolph Walter Brenner

A BCSC panel banned Brenner from BC’s capital markets for two years for failing to file, on time, insider reports relating to securities of a reporting company and for lying to commission staff about his relationship with an offshore account that traded securities of that company.

BCSC Liability and Sanctions Decision – Adis Golic

A BCSC panel banned Golic from BC’s capital markets for seven years after finding that he illegally distributed $42,000 worth of securities to three investors.

In October 2011, Golic was convicted of illegally distributing securities, sentenced to 60 days in jail, and forced to pay $40,000 in restitution.

BCSC Sanctions Decision – Daniel Grant McGee

A BCSC panel banned McGee from BC’s capital markets for five years and ordered him to pay back the $21,500 he obtained and a penalty of $10,000.

In June 2014, a commission panel found that, as a director of Cinnabar, McGee breached prospectus disclosure requirements and signed inaccurate exempt distribution reports for the company.

In January 2014, a commission panel sanctioned Cinnabar, Christopher James G. Bass, and Dale Zucchet.  All three respondents were named in the original notice of hearing.

BCSC Liability Decisions – Michael Patrick Lathigee and Earle Douglas Pasquill; Colin Robert Hugh McCabe and Erwin Thomas Speckert; and, Weiqing Jane Jin

A BCSC panel found that Lathigee and Pasquill committed fraud. Lathigee and Pasquill jointly directed and controlled a group of companies called the Freedom Investment Club (FIC). The panel found that Lathigee and Pasquill fraudulently raised $21.7 million, and also committed fraud by using $8.5 million of $9.9 million to make loans to related companies.

A BCSC panel found that McCabe made misrepresentations and other misleading statements when promoting three companies traded on the Over-the-Counter-Bulletin-Board (OTCBB) in the United States. The panel also found that Speckert, the managing director of a Swiss company, facilitated secret payments to McCabe in connection with one of the promotions.

A BCSC panel found that Jin, a Beijing lawyer working in Vancouver, engaged in illegal insider training. The panel found that Jin purchased 3,000 shares of Hathor Exploration Limited, a mineral exploration company when she knew that Comeco Corporation, a TSX and NYSE company, had made an offer to acquire Hathor. The panel found this to be an undisclosed material fact.

The BCSC panel will make its sanctions decisions in these cases at a later date.

IIROC Liability and Penalty Decision – Simon Roy Jaques

An IIROC panel fined Jaques $80,000 and ordered costs of $20,000. The panel also permanently banned Jaques from IIROC registration. The panel found that Jaques violated IIROC suitability rules and failed to cooperate with IIROC’s subsequent investigation.

Access to more cases

BCSC

Notice of Hearing: HRG Healthcare Resource Group Inc., Alexander Downie, and Daniel G.Mohan

Notice of Hearing: Noshad Dowlati

Notice of Hearing: Keith Henry Alexander

Notice of Hearing: Hon Seng Lum (Victor Lum) and May Lee Chan Lum

Notice of Hearing: Zhong Wen and Anhong Liu

Notice of Hearing: Robert Bruce Rush and Breakthrough Financial Inc.

Notice of Hearing: Thomas Arthur Williams, Susan Grace Nemeth, Renee Michelle Penko,Paul Finney, Irene G. Beilsetin, Christina Kiemel, Helena Yvonne Becker, DennisCarl Weigel, Daniel Quoming Sam, Eric Clark, Sharon Downing, Robert LaudyWilliams, and the Global Group of Companies

IIROC

Settlement Agreement – Nicola Carolyn More

Settlement Agreement: Martin David Lang

Settlement Agreement: Ronald Anton Putzi