BC Securities Enforcement Roundup – September 2013
In September 2013, BC Securities Commission panels released three decisions – two enforcement decisions, and one review of a Mutual Fund Dealers Association decision (MFDA). There were also three concluded cases s from self-regulatory organizations – a liability decision and a settlement from the Investment Industry Regulatory Organization of Canada (IIROC), and a penalty decision from the MFDA.
You can find a summary of the cases below.
A BCSC panel found that Armadillo Energy Inc., a Nevada corporation that claimed it owned an oil lease in Oklahoma, illegally raised $868,769 from 26 British Columbians. For its misconduct, the panel ordered that Armadillo Energy be permanently banned from trading or purchasing securities in BC. The panel also permanently cease-traded the company and ordered Armadillo to pay an administrative penalty of $800,000.
The allegations stem from a notice of hearing issued on August 28, 2012. The other respondents entered into settlement agreements prior to the Armadillo Energy hearing.
A panel found that Cinnabar Explorations Inc., Bass and Zucchet illegally sold shares to seven investors between April and July of 2011.
Cinnabar Explorations, a mining company, has never filed a prospectus in B.C. The company claimed that the seven investors qualified for exemptions under BC securities laws. The panel found they did not. The panel also found that Zucchet made misrepresentations about the shares when he solicited investors, and he counselled an investor to buy shares illegally.
In its original notice of hearing, BCSC staff also named Daniel Grant McGee in its notice of hearing. That hearing is scheduled for December 4, 2013
A BCSC panel upheld the findings and sanctions decisions MFDA panels made against Legare, a former mutual fund salesperson.
In October 2010, a MFDA panel found that Legare breached the conflict of interest rules and failed to cooperate with the SRO’s investigation. In July 2011, a MFDA panel permanently banned Legare from selling mutual funds and made orders against her, including fines totaling $75,000 and costs of $10,000.
A MFDA hearing panel permanently banned Chan from registration and fined her $650,000 after finding that she misappropriated funds from at least 18 individuals over a five-year period.
An IIROC hearing panel settled with Jeske, who admitted to making discretionary trades in client accounts. Jeske agreed to a $15,000 fine, registration suspension of 60 days, and successful completion of the Conduct and Practices Handbook Course by August 1, 2014.
An IIROC panel found that Chang made unauthorized purchases in a client account and then made misrepresentations to the client regarding the number of shares held in the account. The panel dismissed another allegation that Chang engaged in discretionary trading. A hearing on sanctions will be heard at another date.
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