BC Securities Enforcement Roundup – July 2015

BC Securities Enforcement Roundup – July 2015

Every month we release an Enforcement Roundup blog that highlights all of the notable 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 two notice of hearings. There is also one summary of an Investment Industry Regulatory Organization of Canada (IIROC) settlement agreement.

BCSC Sanctions Decision: Mark Aaron McLeary, Robert Hainey, and Jerry Williams

A BCSC panel has fined McLeary, Hainey, and Williams for engaging in market manipulation of shares in a company quoted on the U.S. Over-the-Counter Bulletin Board. The panel also permanently banned each of them from BC’s capital markets.

In January 2015, the panel found that between June 15 and July 6, 2009, McLeary, Hainey, and Williams manipulated the share price of Sungro Minerals Corp., a Nevada corporation that originally had its head office in Surrey, BC.

The panel also ordered that McLeary pay to the BCSC the $91,308.56 obtained as a result of his misconduct, as well as an administrative penalty of $800,000. Both Hainey and Williams were each ordered to pay administrative penalties of $700,000.

BCSC Sanctions Decision: Yan Zhu (a.k.a. Rachel Zhu), Guan Qiang Zhang, and Bossteam E-Commerce

A BCSC panel has fined and ordered permanent bans against Zhu and Zhang, two former residents of Burnaby, BC. The panel also fined and permanently cease-traded Bossteam E-Commerce, the company co-founded by Zhu and Zhang.

In addition to the permanent market bans, the panel ordered Zhu and Zhang to pay a $14 million administrative penalty to the Commission. The panel also ordered the respondents to disgorge to the Commission the $14 million obtained as a result of their misconduct. Bossteam, Zhu, and Zhang are jointly and severally liable for these amounts.

BCSC Liability Decision: Hon Seng Lum (a.k.a Victor Lum)

A BCSC panel has dismissed insider trading allegations against Lum. The panel also dismissed staff’s application for orders in the public interest against Victor Lum and his sister, May Lee Chan Lum.

BCSC Liability Decision: Peter David Harris, Lorne Neil Cire, Christoper Andrew Burke, Millard Michael Kwasnek, Joseph Yvan JeanClaude Thibert (a.k.a. John Thibert), Echo Partners Ltd., Paradox Distributors (1992) Ltd., SPYru Inc., and U-GO Brands Nutritional Products Inc.

A BCSC panel found that Harris, Cire, Burke, Kwasnek, Thibert, Paradox Distributors, SPYru, and U-GO Brands Nutritional Products illegally distributed the securities of SPYru and U-GO. The panel also found that Echo Partners Ltd., U-GO, Cire, and Kwasnek breached a temporary order issued by the Executive Director in February 2014.

In its decision, the panel made various findings of illegal distribution against the respondents. The panel dismissed allegations pertaining to fraud and misrepresentations, and declined the Executive Director’s request to make additional orders in the public interest.

IIROC Settlement Agreement: Geraldine Mannings

An IIROC Hearing Panel accepted a Settlement Agreement, with sanctions, between IIROC staff and Mannings. Mannings admitted that she made unsuitable recommendations regarding the purchase and holding of securities in several clients’ accounts.

Pursuant to the Settlement Agreement, Mannings agreed to pay a fine in the amount of $35,000 and to pay costs in the amount of $5,000.

Access to more cases:

BCSC

Notice of Hearing – Tin Chao Alan Lau

Notice of Hearing – John Leonard Carswell, Robert Thomas Helina, Donald Weiss, Yawar Sattar Khan, David Kenge Kato, SunCentro Corporation, and YDS Energy, Resources and Humanitarian Relief Corporation