Janet Leiper

The Ontario Securities Commission approved a settlement agreement between Staff and Clayton Smith, the directing mind of Crystal Wealth Management System Limited.

Smith admitted to fraudulently misappropriating approximately $11.8 million from mutual funds he managed and failing to disclose conflicts of interest.

The settlement imposed permanent market prohibitions, a reprimand, and a $250,000 administrative penalty.

The Commission approved the settlement, noting that while the monetary penalty was small and potentially uncollectible due to a carveout provision and a receivership over Smith's assets, the permanent market prohibitions and the avoidance of a lengthy hearing made the sanctions fall within a reasonable range of appropriateness.

The Ontario Securities Commission approved a settlement agreement with Royal Mutual Funds Inc. (RMFI) regarding breaches of mutual fund sales practices.

RMFI paid its representatives enhanced compensation for selling proprietary funds over third-party funds, contravening NI 81-105, and failed to maintain adequate compliance systems under NI 31-103.

The Commission approved the settlement, which included a reprimand, a $1,100,000 administrative penalty, and $20,000 in costs, finding it reasonable and in the public interest given RMFI's cooperation and remedial steps.

The respondent, a former CFO and director of a reporting issuer, entered into a settlement agreement with Staff of the Commission regarding his participation in a manipulative trading scheme prior to becoming an officer.

The respondent admitted to participating in transactions that created a misleading appearance of market activity at the direction of the company's founder.

The Commission approved the settlement, finding it in the public interest given the respondent's lack of market experience, voluntary resignation, cooperation, and lack of profit.

The respondent was ordered to pay $12,500, subjected to one-year trading and director/officer bans, and reprimanded.

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.

Following a merits decision finding that the respondents breached Ontario securities law by mishandling principal protected notes and causing a $1.2 million deficiency, the Commission held a sanctions and costs hearing.

The Commission ordered the respondents to jointly and severally disgorge $1,181,397.89, representing the funds obtained through unsupported redemption requests.

The Commission also imposed administrative penalties of $200,000 each, 10-year market participation bans, and joint and several costs of $487,950.34, emphasizing the need for specific and general deterrence given the deliberate and dishonest nature of the misconduct.

The Ontario Securities Commission approved a settlement agreement with Mackenzie Financial Corporation regarding its failure to comply with mutual fund sales practices under National Instrument 81-105.

Between 2014 and 2017, Mackenzie provided excessive non-monetary benefits to dealing representatives, including expensive golf events, sports tickets, and iPads, and failed to maintain adequate systems of control and supervision.

Mackenzie admitted to the breaches, cooperated with the investigation, and agreed to a reprimand, an independent consultant review, a $900,000 administrative penalty, and $150,000 in costs.

The Applicant, a mutual fund dealing representative, sought a stay of a Director's decision imposing terms and conditions on his registration pending a review.

The terms and conditions prohibited him from acting as a dealing representative for members of his church congregation, due to his role as a Lay Minister.

Applying the RJR-MacDonald test, the Commission found there was a serious issue to be tried regarding alleged Charter and human rights infringements.

However, the Applicant failed to demonstrate irreparable harm, as the alleged harm to his business was speculative and he continued to practice his livelihood.

The balance of convenience favoured maintaining the terms and conditions in the public interest to protect potentially vulnerable investors.

The motion for a stay was dismissed.

Staff of the Ontario Securities Commission brought an expedited proceeding seeking an inter-jurisdictional enforcement order against the respondent under s. 127(10) of the Securities Act.

The respondent was previously sanctioned by the British Columbia Securities Commission for market manipulation and submitting a fabricated document to investigators.

The Commission found that the respondent's conduct would have constituted a breach of the Act in Ontario and that he represented a serious risk to the capital markets.

The Commission granted the requested order, imposing permanent bans on trading, acquiring securities, and acting as a director, officer, registrant, investment fund manager, or promoter.

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 applicants applied under section 144 of the Securities Act to vary a merits decision that found they had committed numerous contraventions of Ontario securities law.

Staff of the Commission brought a motion to dismiss the application on the basis that it failed to demonstrate a tenable legal basis.

The Commission granted the motion and dismissed the application, finding that the applicants' arguments regarding alleged conflicts of interest, disclosure issues, and factual errors were essentially an appeal of the merits decision.

The evidence presented was neither new nor compelling, and the applicants failed to meet the standard for section 144 relief.

The Ontario Securities Commission held a hearing to consider a settlement agreement between Staff and the respondents regarding unregistered trading, illegal distribution, and fraud.

The respondents raised approximately $5.4 million from investors through promissory notes without being registered or filing a prospectus.

They also engaged in deceitful conduct by paying distributions from new investors' funds and misrepresenting the funds' performance.

The panel approved the settlement agreement, noting the respondents' admission of breaching Ontario securities law, their commitment to repay harmed investors, and the inclusion of oversight mechanisms.

Staff of the Ontario Securities Commission brought proceedings against the respondent for insider trading and tipping.

The respondent admitted to receiving confidential information about an acquisition and using it to purchase shares, as well as passing the information to another individual who also traded on it.

The Commission approved a settlement agreement, noting the respondent's significant cooperation, and ordered a two-year market participation ban, a $5,500 administrative penalty, and $5,500 in disgorgement.

Following a merits hearing where the respondents were found to have engaged in the illegal distribution of securities and unregistered trading through a complex trading software license scheme, the Commission held a sanctions and costs hearing.

The Commission ordered disgorgement of the net funds obtained from investors, administrative penalties, and significant market participation bans ranging from 6 to 10 years.

The majority held that the unlawful scheme must be terminated entirely, rejecting the respondents' request to continue receiving payments from existing investors.

A partial dissent would have allowed an exception for existing investors to maintain their contracts if they chose to do so.

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

The Commission ordered permanent market bans against the corporate respondent and the two individual respondents.

The individual respondents were also ordered to pay administrative penalties of $200,000 and $150,000, disgorge amounts obtained as a result of their non-compliance totaling over $5.1 million, and pay costs of $125,000.

The Commission declined to order joint and several liability for the disgorgement amounts.

The Ontario Securities Commission found that the respondents engaged in unregistered trading and illegal distribution of securities through the 'Strictrade Offering', a complex software licensing scheme marketed for its tax benefits.

The Commission determined the offering was an 'investment contract' under the Pacific Coast Coin test.

The respondents breached registration and prospectus requirements, and the registrant respondents failed to meet their know-your-client, know-your-product, and suitability obligations.

Allegations of misrepresentation in the contracts were dismissed.

The applicant, a registered mutual fund salesperson, applied for a hearing and review of an MFDA decision that permanently prohibited him from conducting securities-related business and imposed a fine and costs for failing to cooperate with an investigation.

The applicant argued the MFDA lacked jurisdiction to investigate his 'outside business activity' because it was a personal philanthropic venture, and claimed his professional obligations as an accountant prevented him from providing information.

The Ontario Securities Commission dismissed the application, finding the MFDA had jurisdiction to investigate client complaints and the applicant failed to present any new and compelling evidence to justify intervening in the MFDA's decision.

Staff of the Ontario Securities Commission alleged that the respondents contravened Ontario securities law by engaging in unregistered trading, conducting illegal distributions, making prohibited representations about listing on an exchange, and perpetrating fraud on investors.

The Commission found that Blue Gold Holdings Ltd., Raj Kurichh, and Nigel Greening engaged in the business of trading without registration.

BGH and Kurichh were found to have engaged in illegal distributions and made prohibited representations regarding listing.

Furthermore, BGH and Kurichh were found to have perpetrated fraud by misrepresenting the company's sales pipeline and government approvals, diverting investor funds for personal use, and fraudulently diluting the interests of retail shareholders.

Kurichh and Greening were deemed liable for BGH's breaches as directors and officers who authorized, permitted, or acquiesced in the non-compliance.

A sanctions hearing was ordered.

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.

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

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

The Commission ordered permanent bans on trading, acquiring securities, and acting as a director or officer for the respondents.

Staff of the Commission sought an order compelling the respondents to provide witness summaries pursuant to Rule 4.5 of the Ontario Securities Commission Rules of Procedure.

The respondents argued that because they are parties to the proceeding, they are not "witnesses" within the meaning of the Rules or the Statutory Powers Procedure Act, and therefore should not be required to provide summaries of their own evidence.

The Commission rejected this argument, holding that the requirement to provide witness summaries applies to all witnesses, including parties who intend to testify.

The respondents were ordered to provide the required summaries and document references.

Staff of the Ontario Securities Commission sought a reciprocal public interest order against the respondents under subsections 127(1) and (10) of the Securities Act, based on a prior order of the Alberta Securities Commission.

The Alberta order found that the respondents engaged in the illegal distribution of securities and unregistered trading.

The Commission found that the statutory criteria for inter-jurisdictional enforcement were met and that it was in the public interest to issue a protective order.

The Commission permanently banned the respondents from trading in securities, acquiring securities, and acting as registrants or directors/officers of issuers in Ontario, with limited carve-outs for personal registered accounts.