Heather Zordel

Staff of the Ontario Securities Commission alleged that the respondents raised almost $80 million from hundreds of investors through pooled mortgage investment funds without being registered, without filing a prospectus, and by perpetrating a fraud.

The majority of the Commission found that all respondent entities and the three individual principals engaged in the business of trading without registration, contrary to s. 25(1) of the Securities Act.

The majority also found that all respondents except Trilogy engaged in illegal distributions contrary to s. 53(1).

Furthermore, the majority concluded that Paramount, the Silverfern entities, and the principals perpetrated a fraud contrary to s. 126.1(1)(b) by misrepresenting the use of investor funds, acquiring undisclosed ownership interests in mortgage projects, and misusing a pre-paid account.

One commissioner dissented in part, finding that only one principal (Ruttenberg) contravened the Act.

Staff of the Ontario Securities Commission alleged that the respondents breached a cease trade order, engaged in unregistered trading, and distributed securities without a prospectus.

The individual respondents admitted to the contraventions and entered into a settlement agreement with Staff.

The Commission approved the settlement, finding the agreed sanctions—including a $30,000 administrative penalty, $10,000 in costs, and a four-year market ban for each individual respondent—to be reasonable and in the public interest.

Staff of the Ontario Securities Commission sought an inter-jurisdictional enforcement order against the respondents under s. 127(10) of the Securities Act, based on a British Columbia Securities Commission (BCSC) decision finding that the respondents perpetrated a fraud.

The BCSC had imposed permanent market prohibitions and significant financial sanctions.

The Ontario Securities Commission found that the threshold test under s. 127(10) was met and that it was in the public interest to issue a protective and preventative order.

The Commission reciprocated the BCSC's non-monetary sanctions, permanently prohibiting the respondents from trading in securities or derivatives, acquiring securities, and acting as directors, officers, registrants, or promoters in Ontario.

During a merits hearing interrupted by the COVID-19 pandemic, Staff of the Ontario Securities Commission sought to admit the expert opinion evidence of a mortgage underwriting expert in writing.

The respondents did not challenge the expert's qualifications.

The Commission admitted the expert evidence, finding it relevant and necessary to explain industry practices and assess the respondents' policies against those practices, but excluded portions of the report that went beyond the Commission's need for expert assistance, such as interpreting specific fund documents or assessing the ultimate use of funds.

The merits hearing in this proceeding was interrupted by the COVID-19 pandemic.

The Commission suspended in-person hearings and invited submissions on how to proceed.

Staff proposed submitting the remainder of its evidence in writing, while two respondents requested an adjournment.

The Commission declined to adjourn the hearing, finding that proceeding in writing was permissible, efficient, and caused no prejudice to the respondents.

The Commission ordered Staff to file its remaining evidence in writing, after which the respondents could request cross-examination by videoconference.

Staff of the Ontario Securities Commission brought a motion to amend the Amended Statement of Allegations to add a request for a disgorgement order against the individual respondents, and to adjourn the commencement of the merits hearing to allow time to serve one of the respondents.

The Commission found that Staff's inadvertent omission of the disgorgement request did not constitute exceptional circumstances justifying a lengthy adjournment.

However, because Staff committed to completing its case in six days, the Commission was able to adjust the hearing schedule to allow the required notice period for the amendment motion without delaying the conclusion of the merits hearing or disrupting the scheduled testimony of a participating respondent.

Staff of the Ontario Securities Commission sought an inter-jurisdictional enforcement order against the respondent following his conviction in Germany for illegal market manipulation.

The respondent had engaged in a 'pump and dump' scheme, artificially inflating the price of shares he held and selling them for a substantial profit.

The Commission found that the statutory threshold under s. 127(10) of the Securities Act was met based on the foreign conviction.

Concluding that severe sanctions were necessary to protect Ontario's capital markets and provide deterrence, the Commission ordered permanent market bans against the respondent, including permanent prohibitions on trading, acquiring securities, and acting as a director or officer of any issuer.

The respondent entered into a settlement agreement with the Alberta Securities Commission, admitting to acting as an unregistered adviser and making misleading statements regarding the sale of securities.

Staff of the Ontario Securities Commission sought an inter-jurisdictional enforcement order under s. 127(10) of the Securities Act.

The Commission found that the statutory threshold was met and that it was in the public interest to issue a reciprocal order.

The respondent was prohibited from becoming or acting as a registrant in Ontario until February 15, 2029, mirroring the non-monetary sanctions imposed in Alberta.

The Ontario Securities Commission approved a settlement agreement between Staff and Royal Bank of Canada (RBC) regarding allegations of supervisory inadequacies in RBC's foreign exchange (FX) trading business from 2011 to 2013.

Staff alleged that RBC failed to promote a culture of compliance, allowing FX traders to inappropriately share confidential customer information with competitors in electronic chat rooms.

RBC acknowledged the conduct was contrary to the public interest, engaged in significant remediation efforts, and agreed to make a voluntary payment of $13,552,000 and pay $800,000 in costs.

The Commission found the settlement to be in the public interest.

The Ontario Securities Commission approved a settlement agreement between Staff and The Toronto-Dominion Bank regarding allegations of supervisory inadequacies in TD's foreign exchange trading business from 2011 to 2013.

Staff alleged that TD failed to promote a culture of compliance, allowing traders to inappropriately share confidential customer information with competitors.

TD acknowledged the conduct and agreed to a voluntary payment of $9,300,900 and $800,000 in costs.

The Commission found the settlement to be in the public interest, noting TD's significant remediation efforts and exemplary cooperation.

Ava Trade Ltd., a British Virgin Islands-based entity, opened and operated approximately 1400 accounts for Ontario investors to trade contracts for differences (CFDs) without being registered or filing a prospectus.

Staff of the Commission and Ava Trade reached a settlement agreement acknowledging these breaches of the Securities Act.

The Commission approved the settlement, which included an administrative penalty of $550,000, disgorgement of $3.7 million, and costs of $25,000, finding it to be in the public interest.

The Ontario Securities Commission approved a settlement agreement between Staff and Martin Bernholtz, a former director of Titan Medical Inc. Bernholtz admitted to selling shares of Titan while in possession of material non-public information regarding imminent public offerings, contrary to the public interest and the company's insider trading policy.

The settlement included a voluntary payment of $225,000, costs of $75,000, and various director and trading bans.