Enforcement Roundup – May 2018
In this edition of the Enforcement Roundup, we cover several British Columbia Securities Commission (BCSC) activities. We also summarize settlement agreement from the Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA).
BCSC Criminal Enforcement
Mann, of Richmond, B.C., was charged with one count of fraud over $5,000 and one count of theft over $5,000 under the Criminal Code on April 11, 2018, following an investigation by the BCSC.
For more information on this file visit the BCSC’s Criminal Enforcement page.
BCSC Panel Decisions
A BCSC panel ordered temporary market bans against Ardalan and Flexfi Inc. for distributing securities without a prospectus. The panel found that Flexfi sold securities to investors for total proceeds of $2.2 million without filing a prospectus and without an available exemption from the prospectus requirement. The panel also found that as Flexfi’s president and sole director, Ardalan is liable for Flexfi’s contraventions of the Securities Act. At the hearing, the respondents admitted liability for their breaches of the Act.
For his misconduct, Ardalan is ordered to resign any positions he holds as a director or officer of an issuer or registrant (except for Flexfi) and must pay an administrative penalty of $40,000. He is also subject to several market bans outlined in the news release until the later of the date he pays his administrative penalty and May 24, 2022.
Flexfi is banned from trading in or purchasing any securities or exchange contracts, as well as several other market bans. These bans are in effect until May 24, 2022.
A BCSC panel ordered monetary sanctions and permanent market bans against Bai for fraud. The general partnership he controlled, RBP Consulting, also received permanent market bans.
The panel ordered Bai to resign any position he holds as a director or officer of an issuer or registrant and pay an administrative penalty of $1 million. He has also been ordered to pay a $1,291,000 disgorgement.
Both Bai and RBP Consulting have been permanently banned from engaging in securities market, including relying on exemptions set out in the Securities Act and acting in management or consultative capacities in connection with activities in the securities market.
The Poonians and the Sihotas were granted leave to appeal a BCSC panel’s disgorgement order.
The B.C. Court of Appeal confirmed that the net aggregate trading gains resulting from the market manipulation a BCSC panel found the respondents engaged in amounted to $7,332,936. However, the Court of Appeal set aside the disgorgement orders against the Poonians and Sihotas and sent the matter back to the BCSC. ..
Following the Court of Appeal’s instructions, the BCSC panel found that each respondent directly obtained the net trading gains in his or her brokerage account. The panel also found that Thalbinder Singh Poonian indirectly obtained amounts from the brokerage accounts that he controlled in the names of nominees.
Considering the amount each respondent directly and indirectly obtained, the panel made the following disgorgement orders against the respondents:
- Shailu Sharon Poonian pay $3,149,935 to the BCSC
- Thalbinder Singh Poonian pay $1,319,167 to the BCSC
- Thalbinder Singh Poonian and Perminder Sihota pay $1,126,260 to the BCSC on a joint and several basis
The panel did not make any disgorgement orders against Manjit Singh Sihota.
BCSC Settlement Agreement
In the settlement agreement, Simonson and Espeith admitted they sold securities without filing a prospectus and without an exemption from the prospectus requirement.
As part of the settlement, Simonson and Espeith undertake to jointly pay $3,000 to the BCSC. They have also agreed to each successfully complete a course on the duties and responsibilities of corporate officers and directors that is acceptable to the Executive Director within one year of the date of the settlement agreement.
Simonson and Espeith are also both prohibited for one year from becoming or acting as directors or officers of any issuer or registrant, with the exception that both may continue to serve as directors and officers of Dogg Canine.
BCSC Notice of Hearing
The BCSC’s Executive Director issued a notice of hearing alleging that three B.C. residents and a Nevada-based company breached a cease trade order and made misrepresentations to investors.
You can find out more in the hearing file.
IIROC Settlement Agreement
In the settlement agreement, Matthews and Francis each admitted they contravened dealer member rules when they accepted remuneration from someone other than their dealer member firm.
Matthews and Francis agreed to a $99,600 fine, which includes a disgorgement of $84,600. They will also pay costs of $5,000.
MFDA Settlement Agreements
In a settlement agreement, Martell admitted that he contravened various MFDA rules when he:
- processed transactions in the accounts of clients without obtaining instructions in respect of the amount of the transaction, the mutual fund being purchased or sold, or timing of transactions; and,
- failed to record and maintain evidence of client trade instructions with respect to transactions in client accounts..
As part of the agreement, Martell received a suspension from conducting securities-related business in any capacity while in the employ of or associated with any MFDA member for one month. He must also pay a $30,000 fine, costs of $2,500, and comply with MFDA rules.
In the settlement agreement, Gallant admitted to contravening an MFDA rule when he obtained, possessed, and in some instances, used to process transactions, 10 pre-signed account forms in respect of five clients.
Under the settlement agreement, Gallant must pay a $6,500 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 anonymous using BCSC’s online complaint form.