Enforcement Roundup – February 2019
In this edition of the Enforcement Roundup, we cover two British Columbia Securities Commission (BCSC) panel Decisions and the receipt of administrative penalties. We also cover a Mutual Fund Dealers Association of Canada (MFDA) Reasons for Decision, and an Investment Industry Regulatory Organization of Canada (IIROC) supplemental imposition of penalties.
A BCSC panel imposed financial sanctions and market bans on Alan and Jerry Braun, Maxwell and three companies after having found that they committed fraud.
A BCSC panel found that the Brauns, Steven Maxwell (a.k.a. Steven Fassman), and the companies they controlled – Braun Developments (B.C.) Ltd., 8022275 Canada Inc. and 0985812 B.C. Ltd (d/b/a TerraCorp Investment Ltd.) – took $450,000 from two investors in three different transactions.
The panel ordered that Maxwell and Alan Braun pay $120,500 and $323,500, respectively, which are the amounts that they obtained from the fraud. The panel also ordered that J. Braun and Braun Developments be liable for approximately $157,000 of the $323,500 order made against Alan Braun.
In addition, the panel imposed administrative penalties of $450,000 against Alan Braun, $300,000 against Maxwell, and $200,000 against Jerry Braun for their misconduct.
The panel also imposed bans on various market activities by the three men; and permanently banned anyone from trading in the securities of the corporate respondents.
The BCSC received $4.8 million in administrative penalties from two former Burnaby residents, who defrauded hundreds of investors in a Ponzi scheme.
The payment comes after court-appointed receiver – Grant Thornton Limited – distributed about $6.5 million to 464 people who lost money by investing in Bossteam E-Commerce Inc. Every investor with a validated claim was reimbursed for their total losses, plus 5 per cent interest.
The administrative penalty payments mostly came from funds that remained in the frozen bank accounts of Bossteam co-founders, Yan Zhu (a.k.a. Rachel Zhu) and Guan Qiang Zhang. The BCSC froze the accounts during the investigation.
A BCSC panel dismissed allegations that Gravelle and WY ATAP Investments Inc. violated the B.C. Securities Act by guaranteeing repayment of promissory notes and by issuing promissory notes without being registered.
The panel also ruled that Gravelle and WY’s conduct qualified for an exemption from the requirement to be registered to trade in securities and therefore they did not violate the Securities Act in issuing the promissory notes.
On February 8, 2019 an MFDA panel released its reasons for a decision in connection with Backer’s disciplinary decision.
- In its reasons for the decision, the panel confirmed the sanctions imposed on Becker, which are: a fine of $2,745,261.34; costs of $17,875; and, a permanent prohibition from conducting securities related business in any capacity while in the employ of, or in association with, any MFDA Member.
You will find more information on the MFDA panel’s findings in the news release.
An IIROC panel imposed a supplemental penalty on Tassone following a hearing. They are:
- a fine of $103,648, which includes a disgorgement from financial benefits of unauthorized outside business activity
- an administrative fine of $35,000; and,
- a six month suspension from registration in any capacity with IIROC (in addition to the six months imposed in the Hearing Panel’s penalty decision dated December 26, 2017).
Tassone is also required to pay costs in the amount of $40,000. These penalties are in addition to those imposed in the panel’s 2017 decision.
The penalty decisions can be found in the news release.
Report a Concern
If you have any concerns about a person or company offering an investment opportunity, please contact BCSC Inquiries at 604-899-6854 or 1-800-373-6393, or through e-mail at [email protected].
You can also file a complaint or submit a tip anonymously using BCSC’s online complaint form.