In the December edition of the Enforcement Roundup, we discuss two sanctions from the BC Securities Commission (BCSC) and additions to the Investment Caution List. We also highlight four enforcement decisions from the Mutual Fund Dealers Association of Canada (MFDA) and the Investment Industry Regulatory Organization of Canada (IIROC).
As of January 1, 2023, the New Self-Regulatory Organization of Canada consolidates the functions of IIROC and the MFDA. Read more about it here.
BCSC Enforcement
BCSC Sanctions
Brent Hugo Johnson, Mountainstar Gold Inc.
The province’s highest court has dismissed Johnson’s appeal of a $150,000 penalty and lifetime market ban by the BCSC.
The three-judge appeals court decision effectively means that Johnson must pay the penalty and obey the ban imposed by a BCSC panel in 2018. The sanctions followed a BCSC finding that he and his company, Mountainstar Gold Inc., made repeated false or misleading statements in public filings about certain Chilean mining claims between 2012 and 2015.
Read the news release for more details.
John Sand, Jolyon Charles Christopher Gulston, Karol Achs
Sand, Gulston, and Achs must pay a total of more than $1.5 million for defrauding two investors in a battery manufacturing scheme and using over half of that investment on personal expenses, a BCSC panel has ruled.
The panel deemed Sand, Gulston, and Achs “unfit to act as a registrant, director, officer, or advisor” and banned them for life from holding such positions. It also permanently prohibited them from trading or purchasing securities or derivatives, and from other investment market activities.
Read the news release for more details.
MFDA Enforcement
As of January 1, 2023, the New Self-Regulatory Organization of Canada consolidates the functions of IIROC and the MFDA. Read more about it here.
MFDA Settlement Agreements
Ken David Derksen
An MFDA panel outlined its findings of misconduct and confirmed sanctions imposed on Derksen, who conducted business out of the Victoria, B.C. area. In particular, Derksen must pay a $315,000 fine and $10,000 in costs. He has been also permanently prohibited from conducting securities-related business in any capacity while in the employ of or associated with a Member of the MFDA.
Read the news release for more details.
Majid Hassanshahi
In the settlement agreement, Hassanshahi admitted to contravening the MFDA Standard of Conduct rule and Compliance by Approved Persons rule (as it relates to MFDA Member Responsibilities rule) whilst he carried on business in the Squamish and Whistler, B.C. areas. The contraventions took place on or about February 18, 2020.
As a result, Hassanshahi must pay a $10,000 fine and $5,000 in costs, and shall comply with the contravened policies and procedures of the Member and MFDA rules in the future.
Read the news release for more details.
Scotia Securities Inc.
Scotia Securities Inc. admitted to violating various rules and policies of the MFDA. As per the settlement agreement, it must pay a $1,000,000 fine and $75,000 in costs, and shall comply with the contravened MFDA rules and policies in the future. In addition, Scotia Securities Inc. is paying $10.8 million in remediation to clients.
Scotia Securities Inc. is registered in all provinces and territories in Canada with its head office located in Toronto, Ontario.
Read the news release for more details.
IIROC Enforcement
As of January 1, 2023, the New Self-Regulatory Organization of Canada consolidates the functions of IIROC and the MFDA. Read more about it here.
IIROC Settlement Agreement
CIBC World Markets Inc.
CIBC World Markets Inc. admitted that between 2014 and 2021, it failed to establish and maintain a system of controls and supervision to ensure client fee agreements were accurately recorded in its fee management systems and clients were charged appropriately, contrary to IIROC dealer member rules.
CIBC World Markets Inc. agreed to pay a $119,000 fine and $5,000 in costs, and report on the execution of the Remediation Plan to enforcement staff by December 30, 2022, and as thereafter required by enforcement staff to ensure the Remediation Plan is completed satisfactorily.
This case was resolved by Early Resolution Offer.
Read the news release for more details.
BCSC Early Intervention
Investment Caution List
The BCSC publishes an Investment Caution List to notify British Columbians about unqualified investments and unregistered activity originating from outside of the province that accept BC residents as clients.
Below are the December additions to the Investment Caution List.
Quantrix Capital
Quantrix Capital claims to be located in the United Kingdom and it also claims to offer accounts for trading in CFD, forex, stocks and cryptocurrencies.
CentralMargins (aka CentralMargins Trading Services LLC)
CentralMargins Trading Services LLC claims to be based in St. Vincent and the Grenadines and it also claims to offer accounts for trading in CFD, forex, stocks, commodities and cryptocurrencies.
AlfaBTC
AlfaBTC claims to be located in the United Kingdom and it also claims to offer accounts for trading in CFDs, forex, cryptocurrencies, indices, stocks and commodities.
Cryptoneyx
Cryptoneyx claims to have offices in the United Kingdom and it also claims to offer an online trading platform to let clients trade contracts for difference, where Cryptoneyx acts as the broker.
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 by e-mail at [email protected]. You can also file a complaint or submit a tip anonymously using the BCSC’s online complaint form.
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