BC Securities Enforcement Roundup – June 2014

In June, the BC Securities Commission (BCSC) issued one notice of hearing, five enforcement decisions, and two settlement agreements. The BCSC, as a member of the Canadian Securities Administrators, also issued one Investor Alert urging caution for those looking to invest in medical marijuana stocks. The Investment Industry Regulatory Organization of Canada (IIROC) released one settlement agreement relating to a BC resident. The Mutual Fund Dealers Association (MFDA) did not release any decisions or settlement agreements during June relating to BC residents.

You can find a summary of some of the recent matters below.

BCSC Liability and Sanctions Decision – Ronald Stephen McHaffie and BigFoot Recreation & Ski Area Ltd. 

A BCSC panel permanently cease traded BigFoot and ordered it and McHaffie to pay back over $640,000. The panel also permanently banned McHaffie from BC’s capital markets and ordered him to pay a $2,000,000 penalty.

The panel found that McHaffie committed fraud in the sale of shares of BigFoot by making false statements to entice investors to invest. BigFoot’s distribution of shares to 27 of 30 investors for proceeds of over $620,000 breached the prospectus disclosure requirement.

BCSC Liability and Sanctions Decision – Strategic Global Investments 

A BCSC panel permanently banned Strategic Global Investments from BC’s capital markets, ordered it to pay back $80,000 it obtained, and ordered it to pay a $240,000 penalty.

The panel found that Strategic Global Investments

  • perpetrated a fraud against three BC investors by making false statements to entice the three investors to invest US $80,000 in gold and currency options
  • was a sham with no head office, a fictitious website and not registered in Canada or the US to trade gold and currency options
  • stole the investors’ money

BCSC Liability Decision – Daniel Grant McGee 

A BCSC panel found that McGee breached prospectus disclosure requirements. McGee signed exempt distribution reports relating to sales of shares by Cinnabar Explorations Ltd. No prospectus exemption was available. McGee’s actions contributed to the illegal distribution.

The BCSC panel will make its sanctions decision at a later date.

In the original notice of hearing issued in January 2013, BCSC staff also named Cinnabar, Christopher James Bass and Dale Zucchet. In September 2013, a panel found that Bass and Zucchet illegally sold shares of Cinnabar. In January 2014, the panel imposed sanctions on Bass, Zucchet, and Cinnabar.

BCSC Liability Decision – Robert Waters

A BCSC panel found that Waters, a former investment advisor, sold shares of Berkeley Coffee and Tea Inc. to 45 investors for total proceeds of over $310,000 without being registered and without having filed a prospectus.

The BCSC panel will make its sanctions decision at a later date.

In the original notice of hearing issued in January 2013, BCSC staff also named Berkeley and Sean Tan.    In November 2012, Berkeley and Tan settled with the Executive Director.

BCSC Settlement Agreement – Robert Launder 

Launder admitted that he sold shares of Baja Mining Corp. while in a special relationship with the company, and while in possession of undisclosed material facts about the company.

Under the agreement, Launder agreed to pay over $24,000 to the BCSC.  He is also prohibited from purchasing or selling securities of any company with whom he is in a special relationship for three years.

IIROC Settlement Agreement – Scott Bateman 

An IIROC hearing panel announced this month that it had settled with Bateman, who admitted that he made unsuitable recommendations regarding the purchase of securities for a client’s account. Bateman agreed to a $20,000 fine and toretake a required course before registering again with IIROC.  Bateman also agreed to pay costs of $2,000.

Access to more cases

BCSC

Sanctions decision: Bruce Thomson and Independence Energy Corp.

Settlement Agreement: William McDonald Ferguson and Black Gold Resources Ltd. 

Notice of hearing: Hussain Dhala 

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