Enforcement Roundup – May 2017
In this edition of the Enforcement Roundup, we cover two British Columbia Securities Commission (BCSC) panel decisions and two notices of hearing.
We also highlight two settlement agreements from the Investment Industry Regulatory Organization of Canada (IIROC) as well as three Mutual Fund Dealers Association of Canada (MFDA) settlement agreements.
BCSC Panel Decisions
A BCSC panel fined and issued market bans against Cerisse after she made false or misleading statements to BCSC investigators.
In January 2017, the panel found that Cerisse made false or misleading statements in her answers to three questions during an interview with BCSC staff under oath in October 2013. In the same decision, the panel dismissed allegations of misrepresentation, market manipulation, and illegal distribution against Cerisse and two other B.C. residents, Laurence (a.k.a. Lawrence) Frederick Austin and Thomas John Sadler.
For her misconduct, Cerisse has been ordered to pay an administrative penalty of $20,000. She is also subject to several market bans. Cerisse’s bans are to remain in effect until the later of the date that she pays her administrative penalty and six months from the date of the panel’s decision.
A BCSC panel ordered monetary sanctions and permanent bans against Schouw, a Vancouver resident, and his company Hornby Residences Ltd. for fraud.
In January 2017, a BCSC panel found that Schouw perpetrated a fraud on an investor whom he convinced to invest in Hornby Residences for a Vancouver real estate project.
For his misconduct, Schouw has been ordered to pay an administrative penalty of $125,000. He has also been ordered to pay a disgorgement order of $74,612. Schouw and Hornby are jointly and severally liable for the disgorgement amount. Schouw and Hornby are permanently from B.C.’s capital markets.
BCSC Notices of Hearing
The BCSC’s Executive Director issued a notice of hearing alleging that Hamilton and Lichti deceived foreign regulators and the public in order to create a publicly trading shell company ideal for use in a securities manipulation. You will find more information in the hearing file.
The Executive Director of the BCSC issued a notice of hearing alleging that three B.C. men and three companies committed fraud against two investors. You will find more information in the hearing file.
IIROC Settlement Agreements
An IIROC hearing panel accepted a settlement agreement after Rebeck admitted he made unsuitable recommendations for two clients in their sixties. The panel stated the clients suffered a significant loss as a result of Rebeck’s investment recommendations.
Rebeck agreed to a fine of $45,000, and to pay $5,000 in costs. He is prohibited from applying for registration in any capacity with IIROC for six months, must also complete the Conduct and Practices Handbook course prior to being eligible for approval. Upon re-approval, he would be under a 12-month period of close supervision.
In the settlement agreement, Sian admitted he failed to report to his firm his registered assistant’s receipt of a $750,000 gift from a client and subsequent lawsuit against his assistant. He also failed to make reasonable inquiries regarding the client’s instructions to liquidate her account.
Sian agreed to a $20,000 fine and $5,000 in costs.
MFDA Settlement Agreements
In the settlement agreement, Thackray admitted that between April and July 2014, he engaged in securities-related business that was not carried on for the account or through the facilities of the Member firm contrary to the Member’s policies and procedures and various MFDA Rules.
Thackray must pay a $15,000 fine, $2,500 in costs, and comply with the MFDA Rules he contravened.
In the settlement agreement, Gilchrist admitted that between March 2014 and May 2015, she obtained, possessed, and used to process transactions, three pre-signed account forms for two clients thereby contravening an MFDA rule.
For her misconduct, Gilchrist is prohibited from acting as a branch manager or supervisor while employed or associated with an MFDA Member Firm for five years. She agreed to pay a $7,500 fine, $2,500 in costs, and comply with the MFDA Rule she contravened.
In the settlement agreement, Xie admitted that he contravened various MFDA rules at different times when he processed three authorized discretionary trades as part of a dollar-cost averaging strategy for one client; falsified the signature of one client on four account forms; and, failed to comply with a client’s trade instructions and engaged in unauthorized discretionary trading.
For his misconduct, Xie is prohibited from conducting securities related business in any capacity for an MFDA member for 18 months. He also agreed to pay a $5,500 fine, costs of $2,500, and comply with the MFDA Rule he contravened.
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 the BCSC’s online complaint form. InvestRight.org is the British Columbia Securities Commission’s investor education website.
InvestRight.org is the British Columbia Securities Commission’s investor education website.