James D. Carnwath

The Ontario Securities Commission alleged that the Respondents engaged in unregistered trading and advising in commodity futures contracts, made misleading statements to Staff, and acted contrary to the public interest.

The Respondents operated a trading school and assisted students in opening trading accounts with specific brokers, receiving undisclosed referral commissions.

Khan also traded on behalf of clients in managed accounts and provided live trading advice.

The Commission found that the Respondents breached the registration requirements of the Commodity Futures Act, made untrue statements during the investigation, and breached a prior undertaking, all of which constituted conduct contrary to the public interest.

Following a merits decision finding the respondents engaged in unregistered trading, illegal distribution, and securities fraud, the Ontario Securities Commission held a hearing to determine sanctions and costs.

The Commission ordered permanent market bans against BFM Industries Inc. and Liquid Gold International Corp., and 15-year market bans against Andrea Lee McCarthy, with exceptions for her RRSP and RESP.

Staff's requests for disgorgement orders were dismissed because the amounts obtained were not reasonably ascertainable without risking double counting with orders previously made against other respondents.

McCarthy was ordered to pay an administrative penalty of $10,000, taking into account her cooperation, limited financial means, and lack of prior experience in the capital markets.

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 prior decision of the British Columbia Securities Commission (BCSC).

The BCSC had found that the respondents engaged in unregistered trading, illegal distribution, and fraud, and imposed permanent market bans and financial penalties.

The OSC found it was in the public interest to protect Ontario investors and capital markets by imposing permanent cease trade orders and director/officer bans against the respondents, consistent with the BCSC order.

Staff of the Ontario Securities Commission sought sanctions and costs against the respondents following an Agreed Statement of Facts in which the respondents admitted to unregistered trading, illegal distribution, and making misleading statements.

The respondents, acting as a transfer agent, mailed over 10,000 letters to investors falsely claiming an unpaid dividend to induce warrant exercises.

The Commission ordered permanent trading and market prohibitions against the directing mind and his companies, along with a $100,000 administrative penalty.

A lesser five-year prohibition and $2,500 penalty were ordered against his wife, who acted as a nominee director.

The respondents were also ordered to pay $60,000 in costs.

Following a hearing on the merits where findings were made against David Paul Pelcowitz and IMG International Inc., the Ontario Securities Commission held a sanctions and costs hearing.

Staff and Pelcowitz presented a joint submission on sanctions and costs, which the Commission accepted as appropriate and proportionate.

The Commission ordered permanent market bans against Pelcowitz and IMG, an administrative penalty of $300,000 against Pelcowitz, joint and several disgorgement of $605,029.08, and costs of $100,000 against Pelcowitz.

Staff of the Ontario Securities Commission brought an application for an inter-jurisdictional enforcement order against the respondents under s. 127(10) of the Securities Act, based on a prior order of the British Columbia Securities Commission.

The BCSC had found that the respondents engaged in unregistered trading and perpetrated a fraud.

The Commission found it was in the public interest to issue a reciprocal order to protect Ontario investors and capital markets, permanently prohibiting the respondents from trading in securities and acting as directors or officers.

Staff of the Ontario Securities Commission alleged that the respondents engaged in a fraudulent advance fee scheme targeting UK residents, involving artificial offers to purchase shares at inflated prices and requiring advance fees.

The Commission found that David Pelcowitz and IMG International Inc. committed fraud and traded in securities without registration.

However, the Commission declined to make findings against Michael Smith and Nest Acquisitions and Mergers, concluding that they were fictitious entities or aliases used by unknown persons, and that it is contrary to the public interest to make findings against persons unknown to the Commission.

Following a merits hearing where the respondents were found to have engaged in unregistered trading and illegal distribution of securities in relation to a Ponzi scheme (Gold-Quest), the Commission held a sanctions and costs hearing.

The Commission found that the respondents were duped by the scheme's promoters and believed they were operating under a 'friends and family' exemption, which mitigated their culpability.

The Commission ordered five-year market bans, full disgorgement of commissions earned, administrative penalties of $15,000 for each individual respondent, and costs against one represented respondent.

The Ontario Securities Commission held a merits hearing regarding allegations that the respondents engaged in unregistered trading, illegal distribution of securities, and fraud in relation to a foreign exchange trading investment scheme.

The Commission found that the respondents raised approximately $1.8 million from investors without being registered and without filing a prospectus.

Furthermore, the directing minds of the corporate respondent used investor funds to pay earlier investors and for personal expenses, perpetrating a fraud.

The Commission concluded that the respondents breached multiple sections of the Securities Act and acted contrary to the public interest.

The Respondents in a securities fraud proceeding brought a motion seeking disclosure of certain internal documents from Commission Staff, including drafts, internal commentary, and documents evidencing Staff's decision to commence proceedings.

The Commission applied the Stinchcombe standard of disclosure, requiring Staff to disclose all relevant information gathered during the investigation.

However, the Commission dismissed the motion with respect to internally-generated documents evidencing Staff's analysis, commentary, or opinions (Staff work product), finding them irrelevant to the issues to be decided at the merits hearing.

The motion was allowed in part for documents gathered during the investigation and communications between Staff and the Respondents, subject to privilege.

Following a merits decision finding the respondents engaged in securities fraud, unregistered trading, and illegal distribution, the Ontario Securities Commission held a sanctions and costs hearing.

The respondents had raised over $10 million from offshore investors, misappropriating the funds for personal use and high-risk enterprises.

The Commission ordered permanent market bans against the respondents, an administrative penalty of $500,000 each, joint and several disgorgement of $8,892,906, and $250,000 in costs.

Following a merits decision finding the respondents engaged in unregistered trading, illegal distribution, and fraud, the Ontario Securities Commission held a sanctions and costs hearing.

The individual respondent, who misappropriated over $4.6 million from investors in a fraudulent foreign exchange scheme, was permanently banned from the capital markets.

The Commission ordered disgorgement of $4,672,779.98, an administrative penalty of $750,000 to ensure specific and general deterrence, and $200,000 in costs.

Following a hearing on the merits, the respondent was found to have made misleading statements to the Commission and breached a previous cease trade order by trading securities.

In this sanctions and costs decision, the Commission considered the respondent's extensive history of non-compliance, including criminal convictions for similar conduct.

The Commission ordered permanent market bans, an administrative penalty of $250,000, disgorgement of $45,280, and costs of $52,470.25, emphasizing the need for specific and general deterrence.

Staff of the Ontario Securities Commission alleged that the respondents, Shaun McErlean and Securus Capital Inc., engaged in unregistered trading, advising without registration, illegal distribution of securities, and fraud.

The respondents solicited millions of dollars from offshore investors, promising high returns and claiming the funds would be held in segregated accounts.

Instead, McErlean commingled the funds, used them for personal expenses, repaid earlier investors, and invested in private companies in which he had an interest.

He also provided investors with fake bank statements to conceal the misappropriation.

The Commission found that all allegations were proven on a balance of probabilities.

Staff of the Ontario Securities Commission alleged that the respondents engaged in unregistered trading and illegal distribution of securities in relation to Gold-Quest International.

The respondents promoted Gold-Quest, which offered investment contracts promising 87.5% annual returns from forex trading.

The Commission found that the Gold-Quest membership agreements were investment contracts and therefore securities.

The respondents' promotional activities, including hosting presentations and facilitating investments, constituted acts in furtherance of trades.

As none of the respondents were registered and no prospectus was filed, the Commission concluded they breached sections 25 and 53 of the Securities Act.

The corporate directors were also found liable under section 129.2 for authorizing or acquiescing in the breaches.

The moving parties brought a motion challenging the jurisdiction of a single Commissioner to complete a sanctions hearing after the term of the other panel member expired.

The moving parties argued that proceeding before a single member violated the audi alteram partem principle and the quorum requirements of the Securities Act.

The Commission dismissed the motion, finding that section 4.4(1) of the Statutory Powers Procedure Act permits the remaining member to complete the hearing and give a decision, and that section 32 of the SPPA resolves any conflict with the Securities Act's quorum requirements in favour of the SPPA.

Staff of the Ontario Securities Commission alleged that the respondents engaged in unregistered trading, illegal distribution, and fraud in relation to a foreign exchange investment scheme.

The individual respondent, a pastor, solicited millions of dollars from investors, promising high guaranteed returns with no risk.

The Commission found that the respondents traded and advised on securities without registration and distributed securities without a prospectus.

Furthermore, the Commission found that the individual respondent perpetrated a fraud by misappropriating investor funds for personal use and charities, and by deceiving investors about the success of the trading.

The individual respondent was also found to have made misleading statements to Staff during the investigation.

Following a hearing on the merits where the respondents were found to have engaged in fraudulent conduct, unregistered trading, and illegal distribution of securities involving over $25 million from 1,700 investors, the Commission held a sanctions hearing.

The Commission ordered permanent market bans against all corporate and individual respondents.

The individual respondents were each ordered to pay an administrative penalty of $750,000, disgorge the sums they personally misappropriated (totaling $5.82 million), and pay costs of $163,145.

Staff of the Ontario Securities Commission alleged that the respondents engaged in a fraudulent investment scheme involving foreign exchange (Forex) trading.

The respondents raised approximately $29 million from over 1,700 Ontario investors, many of whom borrowed funds through RRSP loans.

The Commission found that the respondents diverted approximately $20 million to uses other than Forex investments, including significant transfers to themselves, and paid fictitious profits to investors to attract new funds.

The Commission concluded that all respondents engaged in fraudulent conduct, unregistered trading, and an illegal distribution of securities, and acted contrary to the public interest.

Staff of the Ontario Securities Commission brought a proceeding against the respondent for making misleading statements and breaching a cease trade order.

The hearing proceeded in writing after the respondent failed to file materials.

Based on affidavit evidence, the Commission found that the respondent made misleading statements regarding his employment history and financial situation, contrary to section 122(1)(a) of the Securities Act.

The Commission also found that the respondent breached a prior sanctions decision and cease trade order by trading securities, contrary to section 122(1)(c) of the Act.

A sanctions hearing was ordered to be scheduled.