Judith N. Robertson

Staff of the Ontario Securities Commission sought an inter-jurisdictional enforcement order against the respondent following his criminal convictions for fraud and forgery.

Staff requested permanent bans on trading, acquiring securities, and acting as a director, officer, or promoter.

The respondent agreed that sanctions were warranted but sought carve-outs to allow him to continue working as a creative producer and to facilitate tax and estate planning.

The Commission rejected the proposed carve-outs for the director, officer, and promoter bans, finding they were not protective of the public and could create loopholes.

However, the Commission accepted the respondent's proposed carve-outs for the acquisition and trading bans, allowing him to trade in personal tax-advantaged accounts, as his misconduct was not related to trading through brokerage accounts.

The Ontario Securities Commission found that Pro-Financial Asset Management Inc. (PFAM) and its CEO, Stuart McKinnon, committed numerous breaches of Ontario securities laws.

PFAM acted as a market intermediary for principal protected notes (PPNs) and failed to deal fairly, honestly, and in good faith with its clients, resulting in a $1.2 million deficiency in the PPN trust account due to unsupported redemption requests and price variances.

PFAM also breached its standard of care as an investment fund manager, failed to maintain minimum working capital, failed to keep satisfactory records, and failed to maintain adequate compliance systems.

McKinnon, as a director and officer, was found to have authorized, permitted, or acquiesced in these breaches and failed to fulfill his responsibilities as Ultimate Responsible Person (URP) and Ultimate Designated Person (UDP).

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

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.

The applicant, a minority shareholder, sought standing to bring an application under section 127 of the Securities Act to delay a special meeting and require corrective disclosure in a management information circular regarding a related party transaction.

The respondent brought a motion to deny standing.

The Commission granted the motion and denied standing, finding that the application raised no novel issues, the alleged disclosure deficiencies had already been widely debated in the market, and intervening at a late stage would unduly interfere with the justified expectations of market participants.

Following a merits hearing where the respondents were found to have engaged in unregistered trading, illegal distribution of securities, and fraud, the Ontario Securities Commission held a sanctions and costs hearing in writing.

The Commission ordered permanent market bans against the principal respondent and his company, and multi-year bans against the other respondents.

The respondents were ordered to disgorge a total of $905,591, pay administrative penalties totaling $375,000, and pay costs of $288,496.25.

Staff of the Ontario Securities Commission alleged that the respondents engaged in a fraudulent forex trading scheme, unregistered trading, and illegal distribution of securities.

The respondents raised over $1.2 million from investors through promissory notes, promising high returns from forex trading, but used the funds for personal expenses and to pay earlier investors in a Ponzi-like manner.

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

The Commission concluded that Todorov perpetrated fraud, and that Todorov, Banik, Guerenska, and Setenterprice engaged in unregistered trading and illegal distribution.

Furthermore, Todorov and Nikolov, as de facto and actual directors of Setenterprice, were deemed responsible for the company's breaches of the Securities Act.

The applicants, trustees of Central GoldTrust and Silver Bullion Trust, brought an application to the Ontario Securities Commission regarding unsolicited take-over bids by Sprott.

The applicants argued the bids violated the identical consideration requirement of the Securities Act and were contrary to the public interest due to misleading statements, confusing structure, and a variation amending powers of attorney.

The Commission found it had jurisdiction to hear the application but concluded the bids did not violate the identical consideration requirement.

However, the Commission found the disclosure regarding the variation to the powers of attorney was inadequate and ordered Sprott to issue a notice of change in information providing clear disclosure to unitholders before proceeding with the bids.

The Ontario Securities Commission held a hearing to consider whether to impose sanctions on Conrad Black and John Boultbee under the inter-jurisdictional enforcement provisions of the Securities Act, based on their criminal convictions for mail fraud and obstruction of justice in the United States, and Black's settlement with the SEC.

The Commission found that the US convictions arose from conduct related to securities and that the US proceedings met Canadian standards of fairness.

Concluding that sanctions were necessary for specific and general deterrence to protect Ontario's capital markets, the Commission ordered permanent bans prohibiting Black and Boultbee from acting as directors or officers of any issuer, registrant, or investment fund manager.

Staff's request for costs was denied.

The Ontario Securities Commission approved a no-contest settlement agreement between Staff and the TD Entities regarding alleged inadequacies in internal compliance systems that resulted in investors being charged inappropriate mutual fund fees.

The TD Entities self-reported the issues, undertook to pay over $13 million in compensation to harmed investors, and agreed to make voluntary payments of $650,000.

The Panel found the settlement to be in the public interest, emphasizing the importance of self-reporting, remediation, and improved compliance systems.

The Ontario Securities Commission heard several procedural motions in a section 127(10) proceeding against the respondents.

The panel dismissed a respondent's motion to sever his case, finding substantial commonality in the allegations and no undue prejudice.

The panel also dismissed requests to vary the severance order and to adjourn the hearing pending an appeal.

Staff's motion for directions on the scope of admissible evidence was dismissed, with the panel declining to review witness statements a priori but cautioning against re-litigating matters decided in U.S. proceedings.

A motion to call a specific witness was also dismissed.

Conrad M. Black brought a motion to stay an Ontario Securities Commission proceeding seeking a reciprocal order under s. 127(10) of the Securities Act based on his U.S. fraud convictions.

Black argued the proceeding was an abuse of process and proposed that his interim undertaking remain in effect instead.

The Commission dismissed the stay motion, finding that a reciprocal order proceeding is an appropriate exercise of its statutory mandate to protect Ontario's capital markets and does not constitute an abuse of process.

The Commission also provided directions limiting the scope of evidence at the upcoming hearing to matters relevant to crafting a protective order, explicitly prohibiting the re-litigation of the U.S. proceedings.

Following a merits hearing where the respondents were found to have engaged in unregistered trading, illegal distribution of securities, and fraud, the Ontario Securities Commission held a hearing to determine sanctions and costs.

The Commission ordered permanent market bans, significant administrative penalties, and disgorgement against the directing minds of the fraudulent scheme.

The salesperson respondents received market bans ranging from 5 to 10 years, along with administrative penalties and disgorgement orders equal to the commissions they earned.

Costs were also apportioned among the respondents.

IIROC Staff applied for a hearing and review of an IIROC Hearing Panel decision that dismissed allegations against TD Securities Inc. (TDSI) for failing to comply with its trading supervision obligations.

The IIROC Hearing Panel had found that several TDSI traders entered artificial closing bids but concluded that TDSI's supervisory system was adequate.

On review, the Ontario Securities Commission found that the IIROC Hearing Panel did not overlook or misapprehend material evidence, nor did it err in law or proceed on an incorrect principle.

The Commission deferred to the IIROC Hearing Panel's factual determinations and its assessment of the adequacy of TDSI's multi-tiered supervisory system.

The application was dismissed.

The applicant sought a temporary cease trade order against an insider bid made by the respondent, alleging the respondent failed to obtain a formal valuation as required by MI 61-101.

The applicant argued the respondent possessed undisclosed material information, specifically confidential power purchase agreement pricing and wind speed data.

The Commission found the applicant failed to provide prima facie evidence that the information was material, noting the applicant's own Directors' Circular stated there was no undisclosed material information.

The Commission dismissed the request for a temporary cease trade order and granted the respondent's cross-motion to dismiss the application.

The Ontario Securities Commission held a hearing on the merits regarding allegations that Global Energy Group, Ltd. and several individuals operated a fraudulent investment scheme.

The respondents sold unregistered securities in the form of limited partnership units in purported Kentucky oil drilling programs to investors, raising over US$16 million.

The Commission found that the respondents traded in securities without registration and distributed securities without a prospectus, with no exemptions available.

Furthermore, the Commission found that the directing minds of Global Energy, Vadim Tsatskin and Christina Harper, perpetrated a fraud on investors by making false representations about the company's history, the use of investor funds, and the expected returns.

The Commission concluded that the respondents' conduct breached the Securities Act and was contrary to the public interest.

Mercer International Inc. applied to the Ontario Securities Commission for a simultaneous hearing with the Québec Bureau de décision et de révision to consider whether AbitibiBowater's take-over bid for Fibrek Inc. should be cease traded.

The Commission acknowledged it had jurisdiction to hear the application, as Fibrek is a reporting issuer in Ontario and the bid affected Ontario shareholders.

However, the Commission declined to exercise its jurisdiction, noting that the Bureau was already seized of the matter, the applicable securities laws were substantially similar, and a simultaneous hearing would not advance the harmonization and co-ordination of securities regulatory regimes.

The application was dismissed.

Mercer International Inc. applied for a hearing on the merits before the Ontario Securities Commission regarding take-over bids for Fibrek Inc. by AbitibiBowater Inc. and Mercer.

The Commission dismissed the application, noting that the Bureau de Décision et de Révision was already properly seized of the matters and had scheduled a hearing.

The Commission concluded that holding a simultaneous hearing would not serve the public interest.