Deborah Leckman

Following a merits decision finding that the Respondents illegally distributed securities, engaged in unregistered trading, and committed fraud, the Commission held a sanctions and costs hearing.

The Commission found the misconduct to be egregious, involving the loss of virtually all investor funds and a callous disregard for investors' interests.

The Commission ordered permanent market bans against the Respondents, joint and several disgorgement of C$1.45 million and US$140,000, an administrative penalty of $550,000 against the individual Respondent, and costs of $275,138.62 apportioned between the Respondents.

The Ontario Securities Commission approved a settlement agreement between Staff and Questrade Wealth Management Inc. Questrade admitted to acting contrary to the public interest by failing to take appropriate steps to determine whether a conflict of interest existed before investing client money in WisdomTree ETFs.

The Commission ordered a reprimand, $100,000 in costs, and accepted a voluntary payment of $2.9 million, finding the settlement reasonable and in the public interest.

Staff of the Ontario Securities Commission alleged that Dennis Meharchand and Valt.X Holdings Inc. illegally distributed securities, engaged in unregistered trading, and committed fraud.

The Commission found that the respondents distributed common shares, convertible notes, and investment contracts without a prospectus or an available exemption.

The respondents also engaged in the business of trading securities without being registered.

Furthermore, Mr. Meharchand committed fraud by making false statements to investors about the use of funds and by using investor funds for improper personal purposes, including gambling.

The Commission concluded that the respondents breached the Securities Act and directed a hearing regarding sanctions and costs.

Brian Sutton, former CFO of First Leaside Securities Inc., applied for a review of an IIROC panel decision finding he breached Dealer Member Rule 38.6(c) regarding the pricing of unlisted fund units.

IIROC Staff cross-applied for a review of the sanctions.

The Ontario Securities Commission found the IIROC panel made cumulative evidentiary errors, warranting a hearing de novo.

Conducting its own analysis, the Commission concluded Sutton's reliance on an illusory 'active market' to price units at $1.00 was unreasonable and breached his obligations.

The Commission set aside the IIROC sanctions and imposed a $50,000 fine, a three-year prohibition on approval as a CFO, a reprimand, and $50,000 in costs.

Following a merits decision finding that the respondents perpetrated a massive corporate fraud involving standing timber assets and related party transactions, the Ontario Securities Commission held a sanctions and costs hearing.

The Commission imposed permanent market participation bans on the individual respondents.

It also ordered administrative penalties totaling over $11.6 million and disgorgement of over $64.6 million, representing salaries, bonuses, and proceeds obtained through the fraudulent conduct.

The respondents were also ordered to pay over $5 million in costs.

The Ontario Securities Commission approved a settlement agreement between Staff and Global RESP Corporation.

The firm admitted to failing to implement policies and procedures to ensure compliance with a 2014 settlement, which prohibited its CEO from acting as an officer.

The approved settlement imposed terms and conditions on the firm's registration, an administrative penalty of $50,000, costs of $25,000, and a reprimand.

The respondent, an insider of a reporting issuer, admitted to engaging in a course of conduct that created a misleading appearance of trading activity and failing to file insider reports.

Staff of the Commission and the respondent jointly submitted a Settlement Agreement for approval.

The Panel approved the settlement, finding it to be in the public interest, and imposed sanctions including a $10,000 administrative penalty, $5,000 in costs, and various trading and director/officer bans.

The respondent, a legal assistant, admitted to providing non-public, confidential information regarding merger and acquisition transactions to another respondent over a four-year period, in breach of the Securities Act.

Staff and the respondent entered into a settlement agreement, which included significant credit for the respondent's cooperation with Staff's investigation against the non-settling respondents.

The Commission approved the settlement agreement, finding the reduced sanctions, which included a reprimand and market bans but no financial penalties, to be reasonable and in the public interest.

The Ontario Securities Commission approved a settlement agreement with the respondent regarding its failure to comply with mutual fund sales practices under NI 81-105.

Over a five-year period, the respondent engaged in excessive promotional spending and provided excessive non-monetary benefits to dealing representatives.

The respondent also failed to maintain adequate controls, supervision, and records.

The settlement included an $800,000 administrative penalty, $150,000 in costs, a reprimand, and a requirement to submit to a review by an independent consultant.

The applicant sought a hearing and review of a Director's decision refusing his application for registration as a mutual fund dealing representative.

Following the Director's decision, the applicant's sponsoring firm withdrew its sponsorship.

The Commission found it had jurisdiction to review the decision despite the withdrawal of sponsorship.

On the merits, the Commission concluded that the applicant lacked both the proficiency and integrity required for registration.

The applicant failed to meet the proficiency requirements as he had not gained 12 months of relevant securities industry experience in the preceding three years.

Furthermore, the applicant demonstrated a profound lack of integrity through a history of regulatory non-compliance, including the use of pre-signed forms, unsuitable leverage recommendations, off-book trading, and repeated dishonesty.

The application was dismissed and the Director's decision was confirmed.

The respondent brought a motion to adjourn the hearing on the merits pending his appeal to the Divisional Court regarding a dismissed motion for a stay based on solicitor-client privilege.

Staff opposed the adjournment, citing its pending motion to quash the appeal.

The Commission found that proceeding with the hearing would not significantly expedite the matter, as the majority of the hearing would occur in September regardless of the outcome of Staff's motion.

The motion to adjourn was granted, and the hearing was rescheduled to September.

The respondents entered into a settlement agreement with Staff of the Commission regarding admitted failures to provide accurate and complete continuous disclosure about the development of a lead product over a 10-year period.

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

The settlement included a reprimand, a consultant's review of corporate governance and disclosure policies, director and officer bans for the individual respondent, and an administrative penalty of $250,000.

The respondents, Dennis Meharchand and Valt.X Holdings Inc., brought a motion seeking the recusal of two members of the Commission's Staff involved in an enforcement proceeding against them, alleging tampering with evidence and bias.

The respondents also requested an adjournment of the motion hearing, which the panel denied due to a lack of exceptional circumstances and the respondents' history of delaying the proceeding.

On the merits of the recusal motion, the panel found no evidence of improper conduct or bias by Staff.

The alleged evidence tampering was an inadvertent scanning error that was promptly corrected, and the use of the word 'complaint' in an investigator's evidence summary did not demonstrate bias.

The motion was dismissed.

Staff of the Ontario Securities Commission applied for a temporary order to suspend the registration of Omega Securities Inc. (OSI) and require it to cease trading, alleging breaches of Ontario securities law related to inaccurate time stamps and data feed discrepancies.

The Commission found that while the allegations were serious and supported by prima facie evidence, a complete suspension and cease trade order was not in the public interest due to the likelihood of irreparable harm to OSI and the steps OSI was taking to rectify the issues.

Instead, the Commission imposed terms and conditions on OSI's registration to ensure compliance and protect the capital markets.

The applicants sought a review of a decision by a Director of the Ontario Securities Commission refusing to amend the individual applicant's registration to designate her as the ultimate designated person (UDP) for the applicant firms.

The Director had found the proposed amendment 'otherwise objectionable' under s. 27(1) of the Securities Act.

The Commission found that the individual applicant's father, who had been permanently suspended as UDP and prohibited from acting as an officer or director of any registrant due to prior non-compliance, continued to act as an officer of the firms by directing sales and recruiting.

The Commission held that the individual applicant, as chair of the boards, failed to take meaningful steps to ensure compliance with the prior order restricting her father's involvement.

Given the firms' history of non-compliance and the critical role of a UDP in promoting a culture of compliance, the Commission concluded that the proposed registration was objectionable and dismissed the application.

Staff of the Ontario Securities Commission and Execution Access, LLC entered into a settlement agreement regarding the respondent's operation of an electronic trading platform for US treasury bills in Ontario without registration or recognition.

The respondent cooperated with Staff to regularize its operations and there were no investor complaints.

The Commission approved the settlement, finding it fair and reasonable and in the public interest.

The respondent agreed to pay $970,000 for allocation by the Commission, $25,000 in costs, and was reprimanded.

Katanga Mining Limited applied for an order under section 17 of the Securities Act authorizing the disclosure of a confidential summons to individuals at four audit firms to assist with a review of past accounting practices.

The Commission granted the request with respect to Katanga's current auditor, finding minimal risk to the ongoing investigation.

However, the Commission denied the request to disclose the summons to the other three audit firms, finding that the potential risk to the investigation outweighed the purported need for disclosure, and instead authorized the disclosure of a letter from Staff confirming the investigation.

The Commission also ordered that its decision remain confidential for a limited period to protect the integrity of the investigation, subject to future publication.

Hecla Mining Company launched an insider take-over bid for Dolly Varden Silver Corporation.

Hecla applied to the Ontario and British Columbia Securities Commissions to cease trade a private placement announced by Dolly Varden, arguing it was an abusive defensive tactic.

Dolly Varden cross-applied to cease trade Hecla's bid for failing to include a formal valuation as required for insider bids.

The Commissions held simultaneous hearings.

They dismissed Hecla's application, finding the private placement was instituted for bona fide business purposes, not as a defensive tactic.

The OSC granted Dolly Varden's application, finding Hecla did not qualify for an exemption from the formal valuation requirement because it had board representation at Dolly Varden within the preceding 12 months.

The BCSC dismissed Dolly Varden's application under its public interest jurisdiction.

Hecla Mining Company applied to cease trade a private placement by Dolly Varden Silver Corporation, arguing it was an abusive defensive tactic against Hecla's take-over bid.

Dolly Varden cross-applied to cease trade Hecla's bid for failing to include a formal valuation required for insider bids under MI 61-101.

The Ontario and British Columbia Securities Commissions held simultaneous hearings.

The Commissions dismissed Hecla's applications, finding the private placement was instituted for bona fide, non-defensive business purposes.

The OSC granted Dolly Varden's application in part, finding Hecla had board representation at Dolly Varden and thus did not qualify for an exemption from the formal valuation requirement, and cease traded the bid until a valuation was provided.

The BCSC dismissed Dolly Varden's application under its public interest jurisdiction.

The Ontario Securities Commission alleged that the respondents engaged in unregistered trading and illegal distribution of securities without a prospectus in relation to the sale of preference shares to 11 Chinese investors seeking to immigrate under Ontario's Provincial Nominee Program.

The Commission dismissed the allegations, finding that the respondents were pursuing legitimate business interests in developing a solar energy business, and their fundraising activities were not mainly the sale of securities.

Furthermore, the Commission held that the prospectus requirements did not apply to the distribution outside Ontario absent fraudulent conduct, and that the sales fell under the private issuer exemption.