Enforcement Roundup – July/August 2016
In this edition of the Enforcement Roundup, we summarize cases from this past summer. In July and August, there were six enforcement decisions from BC Securities Commission (BCSC) panels and one settlement agreement. We also feature a BC Supreme Court decision related to a BCSC investigation. The Mutual Fund Dealers Association of Canada (MFDA) issued news releases on two concluded cases over the same period.
For more details about a case, click on the name of person that appears above the summary.
BC Supreme Court Decision
The Court sentenced Roberto Castano of Surrey, B.C. to 27 months in prison for fraud. Earlier this year, Castano plead guilty to one count of fraud over $5,000 against eight victims. Charges against Mr. Castano were approved by the Criminal Justice Branch following a British Columbia Securities Commission (BCSC) criminal investigation.
BCSC Panel Decisions
A BCSC panel issued financial sanctions and market bans against Williams and his Global Group of companies for fraud and illegal distributions. The panel also issued sanctions for illegal distributions against several finders – Nemeth, Penko (a registrant), Beilstein, and Weigel – who Williams commissioned to help him raise money.
For his misconduct, Williams (a former registrant) must pay a $15 million administrative penalty. The BCSC panel permanently banned Williams and his Global Group of companies from BC’s capital markets, and ordered them to pay $6.8 million in disgorgement.
The BCSC panel made also issued market bans and ordered administrative penalties against Nemeth, Penko, Beilstein, and Weigel. The details of these orders, penalties, and a summary of the January 2016 findings can be found in the news release.
A BCSC panel found that Figueiredo, PARE Realty Ltd, and a numbered company that he controlled committed fraud when they took $81,000 from an investor and used a portion of it to pay purported returns. According to the panel, Figueiredo used the remaining funds for personal expenses.
The panel permanently banned Figueiredo and the companies from the market for their misconduct. The BCSC panel ordered that Figueiredo pay to the Commission an administrative penalty of $130,000. The panel also ordered that Figueiredo and the numbered company (0929870 B.C. Ltd.) pay to the Commission $57,875. Both companies were also cease traded.
A BCSC panel permanently banned Gordon Brent Pierce from the province’s capital markets, citing his history of securities misconduct in British Columbia and in the United States. In its decision, the BCSC panel stated that Pierce poses a grave risk to BC’s capital markets.
A BCSC panel ordered Yong to pay an administrative penalty of $60,000. The BCSC panel also ordered various market bans against Yong that are to remain in effect until the later of the date that he pays his administrative penalty and August 3, 2021. The panel also permanently cease traded the securities of Inverlake Property Investment Group Inc., and Wheatland Business Park Ltd., and made permanent market bans against the two companies.
In September 2015, a BCSC panel found that Yong, Inverlake, and Wheatland illegally distributed securities.
A BCSC panel found that Davis committed fraud when he purported to sell an investor shares in a company that he did not own and instead used the investor’s money on personal expenses. The panel directed the parties to make submissions on sanctions according to the schedule set out in the findings.
A BCSC panel found that Malone breached an order prohibiting him from acting as a director or officer of any issuer and engaging in investor relations activities. The BCSC panel directed the parties to make submissions on sanctions according to the schedule set out in the findings.
BCSC Settlement Agreement
Schneider admitted to breaching a cease trade order in a settlement agreement. For his misconduct, Schneider agreed to pay $10,000, and be prohibited from becoming or acting as a director or officer of any reporting issuer for three years. He also agreed to successfully complete a course on the duties and responsibilities of corporate officers and directors.
MFDA Panel Decisions
In an agreed statement of facts, Mushaluk admitted to acting outside his registration as a mutual fund salesperson. He also admitted to engaging in securities-related business that was not carried on for the account and through the facilities of the MFDA member firm where Mushaluk was registered.
An MFDA panel fined Mushaluk $25,000 and ordered him to pay costs of $5,000. He is also prohibited from conducting securities-related business in any capacity in the employ of, or associated with any MFDA member, effective until July 31, 2017.
Lee, in an agreed statement of facts, admitted that he contravened MFDA bylaws and rules in his personal financial dealings with clients and by not disclosing, or receiving approval, for his business activities. He also admitted to misleading the MFDA and an MFDA member during an investigation. For his misconduct, an MFDA panel fined him $150,000 and ordered costs of $10,000. The panel also permanently prohibited him from conducting securities-related business in any capacity with any MFDA member.
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.