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Enforcement Roundup – October 2019

Enforcement Roundup – October 2019

In this edition of the Enforcement Roundup, we cover one British Columbia Securities Commission (BCSC) Investor Alert, and two BCSC settlement agreements. We also look at two settlement agreements of the Mutual Fund Dealers Association of Canada (MFDA), and one settlement agreement of the Investment Industry Regulatory Organization of Canada (IIROC).

BCSC Investor Alert

“Split games,” a type of pyramid scheme

The BCSC is warning the public about schemes selling virtual “shares” that supposedly increase in value as more buyers are recruited. The virtual shares in these “split games” have been marketed and sold primarily in the Lower Mainland’s Chinese community by B.C.-based promoters of FullCarry (formerly Furuida Global or FRD Global) and International Money Tree (IMT).

“These split games, like other pyramid schemes, depend on more and more people buying in. You could easily lose your entire investment,” said Doug Muir, the BCSC’s Director of Enforcement.

The BCSC urges anyone who has any information about a split game, or is approached to invest in one, to contact the BCSC Inquiries line at 604-899-6854 or 1-800-373-6393 or to file a complaint online. The BCSC first learned of these schemes through its online complaint form.

Read the full Investor Alert for more information.

INVESTOR ALERT

BCSC Settlement Agreement

Chung-Shen “Johnson” Kao, Gagan Deep Bachra, Chi Kay “Dixon” Wong, Meng Cher “Phillip” Tsai

The BCSC has reached settlement agreements with three B.C. men and one man from Alberta who were involved in companies that were illegally selling shares.

Kao, an Alberta resident, admitted that by acting as a nominee director he engaged in conduct abusive to the capital market. The other three admitted to allowing an illegal distribution of securities.

All four men are required to take a course on the duties and responsibilities of corporate officers and directors. As part of the settlement, Wong has agreed to pay $15,000, and Tsai and Bachra have agreed to each pay $7,500, to the BCSC.

Wong, Bachra and Tsai are prohibited for two years and Kao is prohibited for one year from various securities market activities.

None of the men have any history of securities misconduct and all of them invested their own funds into their respective companies.

View the news release for full details on the settlement agreements.

NEWS RELEASE

BCSC Settlement Agreement

George Lay

The BCSC has reached a settlement agreement with a B.C. man who was involved in a company that was illegally selling its shares.

Lay was a nominee director of Verico FS Capital Inc. (FS Capital), which raised $5.38 million from 35 investors between 2014 and 2017.

As part of the settlement, Lay has agreed to pay $30,000 to the BCSC and take a course on the duties and responsibilities of corporate officers and directors. He is also prohibited for three years from various securities market activities.

View the news release for full details on the settlement agreement.

NEWS RELEASE

MFDA Settlement Agreements

Sean Patrick Edward Parker

In the MFDA settlement agreement, Parker admitted that he contravened an MFDA rule when doing business in the Port Alberni, B.C. area between 2012 and 2017.

The MFDA Hearing Panel fined Parker $9,000 and ordered $2,500 in costs. He was also ordered to comply with the MFDA rule he contravened.

View the news release for full details on the settlement agreement.

NEWS RELEASE

Jerome Thomas Bates

In the MFDA settlement agreement, Bates admitted that he contravened MFDA rules when doing business in the Chilliwack, B.C. area between 2009 and 2017 .

The MFDA Hearing Panel fined Bates $15,000, and ordered $2,500 in costs. He was also ordered to comply with the MFDA rules he contravened.

View the news release for full details on the settlement agreement.

NEWS RELEASE

IIROC Settlement Agreement

Alykhan Kassam

In the IIROC settlement agreement, Kassam admitted that he made unsuitable recommendations for two clients that were outside their risk tolerance and investment objectives, contrary to Dealer Member Rules. Both clients suffered losses that represented a significant portion of their total portfolio.

The IIROC Hearing Panel fined Kassam $15,000, imposed a suspension from approval for 60 days, and a 9-month period of close supervision upon any registration with IIROC.

Kassam is no longer a registrant with an IIROC-regulated firm.

View the news release for full details on the settlement agreement.

NEWS RELEASE

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.

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