Andrea Burke

Following a merits decision finding that the respondents perpetrated a Ponzi scheme fraud on investors and that the individual respondent misled investigators, the Capital Markets Tribunal held a sanctions and costs hearing.

The Tribunal denied the respondents' last-minute adjournment request, finding no exceptional circumstances.

The Tribunal ordered permanent market bans against all respondents, finding their conduct egregious and deliberate.

The Tribunal also ordered joint and several disgorgement of $661,077 and US$245,000 for the primary fraud (reducing the gross amount by principal repaid to investors) and $70,000 for a secondary fraud.

Administrative penalties of $800,000 were ordered jointly and severally for the frauds, with an additional $350,000 penalty against the individual respondent for his separate breaches.

Costs of $295,413.65 were awarded to the Commission.

Staff of the Ontario Securities Commission and the respondent sought approval of a settlement agreement regarding allegations that the respondent, as CEO of a reporting issuer, made misleading or untrue statements in news releases and filings.

The statements concerned an intellectual property licensing agreement and failed to disclose the relationship between the issuer and the licensee.

The Capital Markets Tribunal approved the settlement, which included a $75,000 administrative penalty, $15,000 in costs, and a five-year director and officer ban, finding the terms fell within a reasonable range of outcomes and were in the public interest.

Two motions were brought by respondents to adjourn the start of a merits hearing.

The Tribunal granted the motion brought by a newly self-represented respondent, finding that his involuntary change in representation status and exclusion from a joint defence group constituted exceptional circumstances.

The Tribunal dismissed the adjournment motion brought by the remaining respondents, who failed to provide evidence supporting their claim that they needed time to retain new counsel.

The Tribunal also extended filing deadlines but declined to order a premature settlement conference.

The respondents entered into a settlement agreement with Staff of the Ontario Securities Commission regarding allegations of unregistered trading, illegal distribution, and making misleading statements in connection with the promotion and sale of cryptocurrency tokens (Axia Coin).

The respondents admitted to breaching multiple provisions of the Securities Act and agreed to pay administrative penalties, disgorgement, and costs, as well as to permanent market bans.

The Capital Markets Tribunal approved the settlement agreement, finding it to be in the public interest and within a range of reasonable outcomes.

The applicant sought a review of sanctions imposed by the Canadian Investment Regulatory Organization (CIRO) after the Capital Markets Tribunal previously set aside one finding of misappropriation.

The applicant sought to introduce new affidavit evidence regarding his ability to pay and the remaining misappropriation finding.

The Tribunal declined to admit the new evidence, finding it was not new or compelling and amounted to an inappropriate collateral challenge.

The Tribunal reduced the fine for misappropriation from $50,000 to $40,000 to reflect the set-aside finding, but upheld the remaining sanctions, including a permanent ban and $25,000 in costs, noting the severity of the remaining misconduct.

During the merits hearing, after Staff closed its case and the parties filed an agreed statement of facts, the respondents requested additional time to gather and present evidence regarding the amount of money repaid to investors.

The respondents had previously stated they would not introduce evidence.

The Capital Markets Tribunal denied the request, finding it was brought too late, the respondents could not assure the evidence was accessible or helpful, and granting it would cause significant unfairness to Staff.

The respondents operated a Ponzi scheme through Mughal Asset Management Corporation and Lendle Corporation, raising over $3 million from investors by falsely representing that funds would be invested in securities.

Instead, funds were used to pay simulated returns to existing investors and for the personal expenses of the directing mind, Usman Asif.

The Capital Markets Tribunal found that the respondents perpetrated a fraud on investors contrary to s. 126.1(1)(b) of the Securities Act.

The Tribunal also found that Asif made false and misleading statements to investigators, unlawfully disclosed an investigation order and summons, and engaged in conduct contrary to the public interest by interfering with the investigation.

An allegation that Asif breached s. 13 of the Act by failing to comply with a summons was dismissed on the basis that s. 13 does not create a positive obligation that can be breached.

The applicant, a former registered representative, applied for a hearing and review of CIRO decisions finding he misappropriated client funds, effected unauthorized trades, and failed to cooperate with an investigation.

The applicant, who was self-represented, argued he was denied procedural fairness due to his health and that the findings were incorrect.

The Capital Markets Tribunal dismissed most of the application, finding the CIRO panel did not err in denying an adjournment or proceeding with a two-member panel.

However, the Tribunal set aside the finding that the applicant misappropriated funds from two specific clients, concluding the CIRO panel overlooked material documentary evidence (a promissory note and a complaint letter) supporting the applicant's claim that the funds were a personal loan.

The matter regarding those two clients was remitted to CIRO Staff to decide whether to rehear the allegation.

The applicant brought a motion for a stay of two decisions of the Investment Industry Regulatory Organization of Canada (IIROC) pending the disposition of his application for a hearing and review.

The applicant also requested that his oral testimony at the stay motion hearing be kept confidential.

The Tribunal applied the three-part test for a stay and found that while there was a serious issue to be tried, the applicant failed to establish that he would suffer irreparable harm if the stay was not granted.

The Tribunal dismissed the stay motion.

Regarding the confidentiality request, the Tribunal applied the open court principle and found that only limited portions of the transcript containing sensitive health and personal information should be redacted to prevent an affront to the applicant's personal dignity.

Following a merits decision finding that the respondent mutual fund sales representative acted unfairly, dishonestly, and in bad faith towards a vulnerable client by failing to manage conflicts of interest, the Capital Markets Tribunal held a sanctions and costs hearing.

The respondent had accepted appointments as attorney for property and alternate executor, and was named sole beneficiary of the client's estate, without immediately reporting these conflicts to his employer.

The Tribunal ordered permanent market bans, including a director and officer ban, and an administrative penalty of $500,000.

The Tribunal declined to order disgorgement of the estate's value, finding no causal connection between the breach and the testamentary gift.

Costs of $85,000 were awarded to Staff.

The applicant, who was examined as a witness in an OSC investigation, sought an order under s. 17 of the Securities Act authorizing him to disclose his compelled testimony in a U.S. court proceeding.

OSC Staff opposed the application, arguing that the Ontario Superior Court of Justice had jurisdiction over the U.S. court's letter of request and that the Tribunal should decline to exercise its jurisdiction.

The Tribunal found that it was in the public interest to grant the requested relief, as the proposed disclosure advanced the foreign regulatory proceeding resulting from the investigation, and the Ontario Court's involvement did not displace the Tribunal's statutory jurisdiction.

The applicant applied to the Capital Markets Tribunal for authorization under s. 17 of the Securities Act to disclose information from a compelled examination in a U.S. court proceeding.

The respondent argued that the Ontario Superior Court of Justice, which had recognized a letter of request from the U.S. court, had exclusive jurisdiction over the matter.

The Tribunal determined as a preliminary issue that its statutory jurisdiction to grant a s. 17 order was not displaced by the Ontario Court's order, as the requested relief sought to remove a legal impediment under Ontario law rather than interfere with the court's order.

The applicant sought a confidentiality order to redact certain documents in the Record of Original Proceeding for his application to review IIROC decisions.

The Tribunal granted the agreed-upon redactions concerning the applicant's intimate personal medical information.

However, the Tribunal dismissed the applicant's contested requests to redact his doctor's professional contact information and a letter of reprimand from his former employer, finding that neither met the standard required to depart from the principle of open proceedings.

Staff of the Ontario Securities Commission alleged that Stableview Asset Management Inc. and Colin Fisher contravened the Securities Act by making untrue statements to clients, disregarding investment parameters, and failing to disclose conflicts of interest.

The parties submitted a settlement agreement for approval.

The Capital Markets Tribunal approved the settlement, finding it in the public interest.

Colin Fisher was ordered to pay a $750,000 administrative penalty, disgorge $300,000, and pay $270,000 in costs, subject to an installment plan.

Both respondents were permanently banned from participating in Ontario's capital markets, with limited exceptions for Fisher.