BC Securities Enforcement Roundup – November 2014
In November, the BC Securities Commission (BCSC) issued one settlement agreement, four enforcement decisions, and one notice of hearing. The Mutual Fund Dealers Association of Canada (MFDA) issued one decision relating to a BC resident. The Investment Industry Regulatory Organization of Canada (IIROC) accepted one settlement agreement relating to BC residents.
You can find a summary of some of the recent matters below:
A BCSC panel has ordered Michaels to pay the commission the $5.8 million in commissions he obtained as a result of his misconduct, as well as a $17.5 million fine for illegally advising clients, making misrepresentations, and perpetrating a fraud. The fraud affected hundreds of people, many of them seniors. The panel also ordered that Michaels be permanently banned from participating in B.C.’s capital markets.
The panel imposed these sanctions after finding in August 2014, that between June 2007 and December 2010, Michaels illegally and fraudulently advised 484 clients to purchase over $65 million of exempt market securities. The panel found that at least $40 million of the $65 million his clients invested is lost, and most of the rest remains at risk. Michaels was paid $5.8 million in fees and commissions for these activities.
BCSC Sanctions Decision – Daveed Zarr (aka Asi Lalky)
A BCSC panel has sanctioned Zarr for making false statements and illegally trading securities. The panel ordered that Zarr pay a fine of $20,000. The panel also ordered that Zarr be prohibited from participating in B.C.’s capital markets for a period of four years.
The panel imposed these sanctions after announcing its findings in September 2014 that Zarr had breached securities laws regarding registration and prospectus requirements when he offered shares in his company, Zarr Energy Corporation, via a website he created, and when he solicited investments in foreign exchange trading through numerous Craigslist and other online postings. Zarr has never been registered in any capacity in B.C., and Zarr Energy has never filed a prospectus. Zarr also made misrepresentations about his experience as a currency trader, and about potential returns to investors.
A BCSC panel has sanctioned Jin for illegal insider trading. The panel ordered Jin to pay the commission the $4,280 obtained as a result of misconduct, as well as a $12,000 fine. The panel also ordered that Jin be prohibited from purchasing or trading securities of any issuer with whom she is in a special relationship for a period of one year.
The panel imposed these sanctions after finding in July 2014 that Jin was working as a consultant at a Vancouver law firm when she purchased 3,000 shares of Hathor Exploration Limited. The panel found that Jin knew Comeco Corporation, a Saskatchewan company, had made a written proposal setting out the basis of an offer to acquire Hathor, which had not been publicly disclosed.
In the settlement agreement, Graham agreed to pay $10,000, and to successfully complete a course on the duties and responsibilities of corporate officers within one year of the date of the settlement agreement.
Graham admitted that he breached a cease trade order by taking actions in furtherance of a distribution of shares of Artventive Medical Group Inc. (then Uranium Plus Resource Corporation) to 13 foreign individuals between February 2010 and May 2014.
A BCSC panel has found that McIntosh (a.k.a. Bert McIntosh, Roberta Butcher, Roberta Mayer), a B.C. resident and former registrant who resigned in 2003, illegally advised an investor to purchase certain exempt market securities in April 2011. McIntosh was not registered when she did this.
The BCSC panel will make its sanctions decision at a later date.
An MFDA hearing panel found that Breuer engaged in personal financial dealings with a client, engaged in unauthorized discretionary trading, engaged in conduct unbecoming an Approved Person, and failed to cooperate with the MFDA Investigation.
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