Enforcement Roundup – May 2019
In this month’s edition of Enforcement Roundup, we cover the recognition of a British Columbia Securities Commission (BCSC) order, as well as an extension of temporary orders. We also look at one Mutual Fund Dealers Association of Canada (MFDA) Settlement Agreement, two MFDA Reasons for Decision, and separate Annual Enforcement Reports from the MFDA and the Investment Industry Regulatory Organization of Canada (IIROC).
BCSC Order Decision
The BCSC won a victory in a Nevada court to enforce a $21.7-million order against fraudster Michael Lathigee – the first time a U.S. court has recognized a BCSC order for someone to repay ill-gotten gains.
A BCSC panel found in 2014 that Lathigee, a former Vancouver resident who moved to Las Vegas, fraudulently raised millions of dollars from investors without telling them about the financial condition of companies he controlled. He also used the money to make loans to related companies, instead of investing the funds in foreclosures of residential properties.
Lathigee has appealed the decision to the Supreme Court of Nevada. The BCSC is working with legal counsel to determine its next steps.
BCSC Temporary Order Extension
A BCSC panel extended temporary prohibitions that were previously imposed on several individuals, companies, and issuers in November 2018. Full details regarding the individuals and companies that had their temporary orders extended can be found in the news release.
The orders will expire May 27, 2020, unless further extended through an application of the Executive Director or the panel’s own motion.
MFDA Settlement Agreement
In an MFDA settlement agreement, IGFS admitted that it failed to adequately query the suitability of the recommendation and sale of mutual funds subject to deferred sales charges to two elderly clients, contrary to MFDA Rules and an MFDA Policy.
An MFDA Hearing Panel approved a settlement agreement in which IGFS must pay a fine of $150,000 and costs of $15,000.
MFDA Reasons for Decision
MFDA Enforcement Report
The MFDA released its 2018 Annual Enforcement Report which highlights the MFDA’s enforcement activities.
Highlights of the report include 136 proceedings commenced in 2018 which is the highest number of proceedings commenced by the MFDA in any year to date, and concluded hearings resulted in 19 permanent prohibitions and 41 suspensions against approved persons and total fines of $6,080,031 and $592,000 in costs against members and approved persons.
IIROC Enforcement Report
IIROC published its annual Enforcement Report. .The report outlines IIROC’s 2018 highlights which include 127 completed investigations, 42 prosecutions of individuals, and 21 suspensions of individuals. Another highlight is IIROC’s public consultation on two new proposed disciplinary programs aimed at providing more flexibility and efficiency when addressing wrongdoing.
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.