David L. Knight

The Ontario Securities Commission alleged that M P Global Financial Ltd. and its sole director, Joe Feng Deng, engaged in unregistered trading, unregistered advising, and an illegal distribution of securities by selling 'Guarantee Corporation Debentures' to over 150 investors, raising over $21 million.

The funds were purportedly for foreign currency trading, but significant amounts were lost or used to pay other investors.

The Commission found that the Debentures were investment contracts and therefore securities.

The respondents breached the registration and prospectus requirements of the Securities Act.

Mr. Deng was found liable as a director for the corporate breaches.

The allegations of unregistered advising were dismissed due to insufficient evidence.

The conduct was found to be contrary to the public interest.

The Ontario Securities Commission held a hearing on the merits regarding allegations that Goldpoint Resources Corporation and its principals engaged in a fraudulent scheme to market and issue securities.

The Commission found that the respondents traded previously unissued Goldpoint shares without meeting registration and prospectus requirements, and that the accredited investor exemption was not available.

The respondents made prohibited representations that Goldpoint would be listed on a stock exchange and made false statements about having profitable mining operations in Ghana.

The Commission found that the respondents engaged in the unauthorized diversion of investor funds, depriving over 110 investors of approximately $1.7 million, thereby committing fraud.

Novielli and Moloney were found liable as directors or officers for Goldpoint's contraventions.

Pimentel was also found to have made materially untrue statements during a compelled examination.

The Ontario Securities Commission held a hearing to consider whether Goldbridge Financial Inc. and Wesley Wayne Weber breached the Securities Act by engaging in unregistered trading and advising.

The respondents posted advertisements online offering trading services and "free" day trading lessons conditional on depositing funds into a corporate trading account.

The Commission found that the respondents breached sections 25(1)(a) and 25(1)(c) of the Act as they were not registered and no exemptions were available.

Furthermore, Mr. Weber breached section 122(1)(a) by making false and misleading statements to Commission Staff and a Commission Panel regarding his trading activities and the use of false names to open online brokerage accounts.

The Commission also found that the respondents acted contrary to the public interest by breaching a temporary cease trade order.

A sanctions and costs hearing was ordered to be scheduled.

Following a merits decision finding that the respondents engaged in illegal trading and distribution of securities in a multi-jurisdictional scheme, the Commission held a sanctions and costs hearing.

The corporate respondents had been petitioned into bankruptcy.

The Commission determined that while the Bankruptcy and Insolvency Act did not prevent it from exercising its public interest jurisdiction, it would restrict monetary orders to the individual respondents to avoid depleting assets available for investors.

The Commission ordered permanent market bans against the individual respondents, noting their egregious conduct, offshore transfer of funds, and one respondent's prior disciplinary history.

Each individual respondent was ordered to pay a $200,000 administrative penalty and disgorge funds they personally obtained or transferred offshore.

The individual respondents were also ordered to pay $117,441.51 in costs.

Staff of the Ontario Securities Commission alleged that the corporate and individual respondents engaged in unregistered trading and illegal distributions of securities in relation to purported biofuels technology companies.

The Commission found that the respondents acted as market intermediaries whose primary business was raising capital, precluding reliance on the accredited investor exemption.

The individual respondents engaged in acts in furtherance of trades by signing treasury directions, opening bank accounts, and maintaining misleading websites.

The Commission also affirmed its jurisdiction over the matter despite the use of offshore entities, finding a substantial connection to Ontario.

The respondents were found to have breached sections 25 and 53 of the Securities Act and acted contrary to the public interest.

Staff of the Ontario Securities Commission brought allegations against Norshield Asset Management (Canada) Ltd., Olympus United Group Inc., John Xanthoudakis, Dale Smith, and Peter Kefalas regarding the collapse of the Norshield Investment Structure, which resulted in significant losses for retail investors.

The Commission found that Xanthoudakis and Smith were the directing minds of the complex investment structure.

The respondents breached Ontario securities laws by failing to deal fairly, honestly, and in good faith with clients, specifically by communicating artificially inflated net asset values and engaging in preferential redemptions.

They also failed to maintain proper books and records and provided materially misleading information to Commission Staff during an investigation.

The Commission concluded that the respondents' conduct was abusive to the integrity of Ontario's capital markets and contrary to the public interest.

The Ontario Securities Commission held a hearing to consider whether to approve a settlement agreement between Staff and the respondent regarding his involvement with Gold-Quest.

The respondent admitted to serious misconduct but cooperated with Staff, ceased activity upon learning of the receivership, and compensated some investors.

The Panel applied the standard that a settlement should be approved if it falls within acceptable parameters, rather than substituting its own judgment.

The settlement was approved, resulting in a ten-year prohibition on acting as a registrant, removal of exemptions, and an order to disgorge approximately $60,851.

The applicant, Weizhen Tang, brought an application to permit him to trade in foreign currencies under supervision on behalf of himself and consenting investors, despite an existing temporary cease trade order.

Staff of the Ontario Securities Commission sought to extend the temporary cease trade order pending related criminal proceedings.

The Commission found that the applicant had admitted to serious allegations, including failing to disclose losses, creating misleading account statements, and dissipating all invested funds in what Staff alleged was a Ponzi scheme.

The Commission dismissed the application to permit trading, finding it would pose an unacceptable risk of further harm to investors and capital markets, and extended the temporary cease trade order.

The Independent Financial Brokers of Canada (IFBC) applied for a review of the Ontario Securities Commission's decision to approve an amendment to a Mutual Fund Dealers Association (MFDA) by-law.

The MFDA and Commission Staff challenged the panel's jurisdiction and the IFBC's standing.

The hearing panel dismissed the application, finding it lacked jurisdiction under sections 21.7, 21.1(4), and 144 of the Securities Act to review a policy decision made by the Commission as a whole.

Furthermore, the panel held that the IFBC, as an industry lobby group, was not 'directly affected' or 'affected' by the by-law approval, and therefore lacked standing to bring the application.

NorthWest Value Partners Inc. applied for a hearing and review of two decisions of the Toronto Stock Exchange (TSX) regarding InterRent Real Estate Investment Trust: a decision accepting notice of a private placement without requiring unitholder approval, and a decision allowing InterRent to postpone its annual meeting.

On preliminary motions, the Ontario Securities Commission granted intervenor status to CLV Group Inc., denied NorthWest's request for disclosure of the subscribers' names, and concluded it would defer to the TSX's decision on the private placement as NorthWest failed to establish grounds for intervention under the Canada Malting test.

The Commission also dismissed the request to review the meeting date decision because it was filed outside the 30-day statutory time limit.

Pala Investments Holdings Limited and its subsidiary applied to the Ontario Securities Commission for an order to cease trade a shareholder rights plan (poison pill) adopted by the board of Neo Material Technologies Inc. in response to Pala's hostile partial take-over bid.

The Commission dismissed the application, finding that the board had acted in accordance with its fiduciary duties to protect the long-term interests of the corporation, and that an overwhelming majority of Neo's shareholders had made an informed decision to approve the rights plan in the face of the outstanding bid.

The Commission concluded it was not in the public interest to interfere with the board's decision or the shareholders' ratification at this time.

NorthWest Value Partners Inc. applied for a hearing and review of two decisions of the Toronto Stock Exchange (TSX) regarding InterRent Real Estate Investment Trust.

The TSX had allowed a private placement to proceed without unitholder approval and permitted a delay in the annual meeting.

The Ontario Securities Commission granted intervenor status to CLV Group Inc. but denied it to Mike McGahan.

The Commission declined to order disclosure of the private placees' names to protect their privacy.

Applying the Canada Malting test, the Commission deferred to the TSX Listing Committee Decision, finding no grounds to intervene.

The application to review the TSX Meeting Date Decision was dismissed as it was filed out of time.

Following a merits decision finding that the respondents breached continuous disclosure obligations by failing to disclose the potential revocation of mining leases in Sierra Leone, the Ontario Securities Commission held a hearing to determine sanctions and costs.

The Commission declined to impose administrative penalties or order the corporate respondent to implement new disclosure policies because Staff failed to provide adequate notice of these specific sanctions in the Notice of Hearing.

The CEO, who was the driving force behind the non-disclosure, was reprimanded and banned from acting as a director or officer of any issuer for 10 years.

The CFO, who acquiesced in the failures, was reprimanded and banned for 12 months.

The corporate respondent and the CEO were ordered to pay $60,000 and $40,000 respectively towards the costs of the investigation and hearing.

The Ontario Securities Commission held a hearing to consider a settlement agreement between Staff and Research In Motion Limited (RIM) and several of its directors and officers regarding the improper backdating and repricing of stock options over a ten-year period.

The misconduct resulted in an undisclosed benefit of approximately $66 million and misleading public disclosure.

The Commission approved the settlement agreement, finding it to be in the public interest.

The settlement included substantial financial contributions to RIM, administrative penalties totaling $8 million, costs of $1.05 million, reprimands, and various prohibitions and educational requirements for the individual respondents.

Pala Investments Holdings Limited and its subsidiary applied to the Ontario Securities Commission for an order to cease trade the shareholder rights plans of Neo Material Technologies Inc. The application was brought in the context of Pala's takeover bid for Neo.

The Commission dismissed the application, finding that the Second Shareholder Rights Plan was adopted by the Neo Board in response to the Pala Offer, was approved by an overwhelming majority of Neo shareholders, and there was no evidence of coercion or that the Board did not act in the best interests of the corporation.

The Commission concluded it was not in the public interest to grant the relief sought at this time.

The moving parties, respondents in an ongoing enforcement proceeding, brought a motion to stay the proceeding on the grounds of a reasonable apprehension of bias.

The motion was based on public comments made by the Chair of the Ontario Securities Commission during a television interview regarding the honesty of the individuals who ran Norshield.

The moving parties argued that these comments created a reasonable apprehension of bias on the part of the hearing panel under the doctrines of systemic bias, institutional impartiality, and corporate taint.

The Commission dismissed the motion, finding that the integrated agency model is statutorily authorized and that safeguards exist to separate the adjudicative function from the Chair and enforcement staff.

The panel concluded that a fully informed reasonable person would not apprehend bias on the part of the independent hearing panel based on the Chair's comments.

In an insider trading proceeding, the respondents brought a motion for unrestricted disclosure of forensic images of a third party's computer hard drives.

Staff had withheld two images citing the third party's privacy and sensitive commercial information.

The Commission held that while respondents are entitled to a high standard of disclosure akin to Stinchcombe to make full answer and defence, this right must be balanced against the legitimate privacy interests of third parties.

The Commission ordered disclosure of the disputed images but imposed strict conditions, including that the images remain in the custody of counsel or their expert, not be electronically copied, and be used solely for the purpose of the proceeding.

The respondents brought a motion challenging the standing of the Investment Dealers Association (IDA) or its staff to apply for a hearing and review of an IDA disciplinary hearing panel decision under section 21.7 of the Securities Act.

The Commission dismissed the motion, finding that the IDA is a 'person directly affected' by the decision of its independent hearing panel and therefore has standing to seek a review.

The Commission held that this interpretation is consistent with the IDA's regulatory mandate and the purposive interpretation of the Act.

The Ontario Securities Commission held a hearing to consider a settlement agreement between Staff and Peter George Lee, former CFO of HIP Interactive Corporation.

Lee admitted to violating s. 122(1)(b) of the Securities Act by certifying false interim financial statements that concealed a $1.3 million inventory overstatement.

The Commission approved the settlement agreement, finding it in the public interest.

Lee was reprimanded, prohibited from acting as a director or officer of any reporting issuer or registrant for 15 years, and ordered to pay an administrative penalty of $13,000 and costs of $2,000.

Following a finding that the respondents engaged in an illegal scheme to induce vulnerable individuals to transfer locked-in RSPs into private companies, the Commission held a hearing on sanctions and costs.

The Commission ordered permanent cease trade orders, director and officer bans, and reprimands against the architects of the scheme.

The registrant involved had his registration terminated and was subject to a five-year cease trade order.

The respondents were ordered to pay costs totaling $108,000, apportioned based on their degree of responsibility.