BC Securities Enforcement Roundup – September 2014

In September, the BC Securities Commission (BCSC) issued four enforcement decisions and one settlement agreement. The Mutual Fund Dealers Association of Canada (MFDA) and the Investment Industry Regulatory Organization of Canada (IIROC) did not release any decisions or settlement agreements during September relating to BC residents.

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

BCSC Settlement Agreement – Bank Gutenberg AG, Gutenberg Management AG, and Gutenberg Group AG

Bank Gutenberg, Gutenberg Management, and Gutenberg Group admitted in a settlement agreement that they traded securities on behalf of BC residents without being registered.

As part of the settlement agreement, the respondents have agreed that they breached securities laws regarding registration requirements. They have agreed to pay $850,000 to the commission in respect of this matter. All of the respondents have been permanently banned from trading in or purchasing securities, and from engaging in investor relations activities.

BCSC Sanctions Decision – Robert Waters

A BCSC panel has fined and issued orders against Waters, a former investment advisor who engaged in an illegal distribution. The panel ordered that Waters pay a fine of $20,000, and banned him from BC’s capital markets (with limited exceptions) for six years.

In June 2014, a commission panel found that Waters sold shares of Berkeley Coffee and Tea Inc. to 45 investors for total proceeds of over $312,977 without being registered and without having filed a prospectus.

BCSC Liability Decision – Thalbinder Singh Poonian, Shailu Sharon Poonian, Robert Joseph Leyk, Manjit Singh Sihota, and Perminder Sihota

A BCSC panel has found that the respondents, all B.C. residents, engaged in a market manipulation that led to a misleading appearance of trading activity in, or an artificial price for, shares in OSE Corp, an Ontario company whose shares traded on the TSX-V.

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

BCSC Liability Decision – Michael Jerome Knight, Jeffrey Karl Wiegel, 0772835 B.C.Ltd., Local 1661 Building Inc., and Almaval Building Inc.

A BCSC panel found that the respondents sold securities without a prospectus and without being registered. In addition, the panel found that Knight committed fraud and breached a BCSC order prohibiting him from engaging in certain conduct in B.C.’s capital markets.

While Streamline Properties Inc. was named in the Notice of Hearing, the panel made no findings against Streamline.

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

BCSC Liability Decision – Daveed Zarr

A BCSC panel has found that Zarr(a.k.a Asi Lalky) illegally distributed shares and made misrepresentations when he offered shares in his company, Zarr Energy Corporation, via a website he created, and through numerous Craigslist and other online postings.

While Zarr Energy Corporation was named in the Notice of Hearing, the panel made no findings against Zarr Energy.

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